What's the going oil lease rates?


#1

We were looking to see if anyone has an idea of the best lease rates being offered in 02-13S-38E, Lea County for 1/4 RI and 1/5 RI.

We are being offered 1/5 RI and $300/nma lease bonus.

Thoughts?

Thanks,

Mel Wood


#2

Seems light given the climate right now. The S/2 of the county is where there have been very high offers $80K+/acre while the N/2 looks to be ranging from low hundreds up to around $4,500. I would counter with a higher but viable bonus along w/ a 1/4 royalty, 3 yr no extension term and any standard pugh clauses you want (e.g no deductions for marketing/servicing) and let them come back to you with a response.

The worst they can say is no but I assume you’ll end up with better terms than currently being offered, particularly if it is from an operator with other holdings in the area.

Good luck!