Wolfcamp shale leasing activity in Dawson County TX

I have been approached recently (as have many mineral right owners in my area) about a lease. Can anyone help me with what is reasonable offer? Supposedly we sit right on top of this major formation.

Dear Kool -

This is practically the same answer I just sent to another landowner in your part of the world:

A flurry of leasing activity has begun in SE New Mexico and in a number of Texas Counties to the East and South. From what I have heard, there are hundreds of Landmen canvasing 16 to 20 counties for leases.

This is due to a number of very prolific wells having been successfully completed in the Leonardian or Avalon Shale, the Bone Springs Formation, the Wolfcamp Shale and the Sprayberry formation (there's even a mix of the last two people are calling the "Wolfberry") across various sections of the area.

I advise that you (and every other land or mineral owner out there) have an Oil and Gas Attorney look over any lease or other papers you receive. The benefits of having an Attorney assist you in the negotiations for any lease far outweigh the expense in legal fees.

If you do not know one, the State Bar Association's website has a link that can help you locate Oil and Gas Attorneys in your area.

Either way, you may want to consider holding off a little while (perhaps even several months) before accepting any offers you receive. Once the companies have picked up as many leases as they can in a given area at a given bonus and royalty, they will go back in and negotiate with the remaining landowners at higher rates - sometimes substantially higher rates.

Hope this helps -