my 3 yr lease just expired over in SOuth Hills area of FW, TX. I got $500 for signing bonus then and 20%. Now, to re-up lease, they are offering $1,000/acre!. That’s it! My lot is like .21 acres, so i would get a little over $200. Percentage of royalties jumped to 25%.
Should i hold out for a larger signing bonus? What happens if i hold out and they don't up the offer? What are my options? Any suggestions? Chesapeake is going through Purple Land Mgmt. to handle re-ups...so that is who i am dealing with.
Unfortuately you dont carry a lot of bargaining power since you have a only 0.21 acre lot so playing hardball may not be a powerful strategy. You could talk with some neighbors to see if anyone has had luck asking for a higher bonus, and then you can ask for more since the leasing company likely doesnt expect you take their first offer no questios asked. Generally I’m seeing leases in Tarrant ranging from $1,000-$4,000/acre tops these days, and the high end would be reserved for the ‘best’ areas of the county. So, you may have a little bit of room to get a higher per acre bonus, but given the size of your lot, your bonus will realistically only go up a few hundred dollars tops. Your royalty % is very good and thats probably more important than the bonus at this point anyway. If I were you, I’d insist that the lease stipulate that marketing, transportation costs, etc. will not be deducted from your royalty check - that could add an extra 15-25% in future income to any royalty checks that you ever see. Eliminating deductions combined with a 25% royalty makes for a pretty good lease. Good luck.
hey thanks…good info. maybe i’ll ask for $500 with you stipulations added in for royalties?
A. Loren said:
Unfortuately you dont carry a lot of bargaining power since you have a only 0.21 acre lot so playing hardball may not be a powerful strategy. You could talk with some neighbors to see if anyone has had luck asking for a higher bonus, and then you can ask for more since the leasing company likely doesnt expect you take their first offer no questios asked. Generally I’m seeing leases in Tarrant ranging from $1,000-$4,000/acre tops these days, and the high end would be reserved for the ‘best’ areas of the county. So, you may have a little bit of room to get a higher per acre bonus, but given the size of your lot, your bonus will realistically only go up a few hundred dollars tops. Your royalty % is very good and thats probably more important than the bonus at this point anyway. If I were you, I’d insist that the lease stipulate that marketing, transportation costs, etc. will not be deducted from your royalty check - that could add an extra 15-25% in future income to any royalty checks that you ever see. Eliminating deductions combined with a 25% royalty makes for a pretty good lease. Good luck.
I have a lot about the same size as yours in Burleson, Im interested to hear more about how you were able to re-lease.
I thought if they drilled a well during that 3 year time frame that they could renew the lease indefinately and that it wouldnt expire unless they chose. Maybe you signed a diferent deal than me.
My lease says the following:
- “This is a paid up lease and subject to the other provisions contained herein, this lease shall be for a term of (3 years) from this sate(called primary term) AND as long thereafter as oil, gas, or other mineral is produced from said land or land with which said land is pooled hereunder.”
By the way congrats on owning your minerals. I signed for 3k an acre (600) on 1/4th acre at 22.5% three 3 yrs ago. My lease is being drilled finally.