Is anyone familiar with using percentages? Approx. 1,400 net mineral acres; Chambers and Jefferson Counties
2 yr extension option
$100/acre for 75% of acreage under option
$400/acre for 25% of acreage under lease
Ability to fill in description on leased acreage at a later date
Seems sort of strange to me. Any comments would be appreciated.
Dear Ms. Hamilton,
Without seeing the entire agreement, I can only take a wild guess.
I might guess that they want to lease 1/4 of the acreage at $400 per acre and option the balance at $100 per acre. If they exercise, I would only guess that the strike price is $400 per acre.
I am very familiar with this area. Is this Samson or Fairways? I have a guess, but will not state it here.
With your acreage position, you should be able to negotiate a minimum required selection, such as at least 30%. Also, if they are wanting to conduct seismic, you would want liquidated damages if the seismic is not performed. Also, you would want a professional lease form with your acreage position.
The target is deep yegua and the wells in Jefferson have been fabulous. Bona fide barn burners.
I'd counter with $600 lease and $300 option.. my two cents...opt out of the 2 year extension. what is the royalty offered?
Buddy Cotten said:
Dear Ms. Hamilton,
Without seeing the entire agreement, I can only take a wild guess.
I might guess that they want to lease 1/4 of the acreage at $400 per acre and option the balance at $100 per acre. If they exercise, I would only guess that the strike price is $400 per acre.
I am very familiar with this area. Is this Samson or Fairways? I have a guess, but will not state it here.
With your acreage position, you should be able to negotiate a minimum required selection, such as at least 30%. Also, if they are wanting to conduct seismic, you would want liquidated damages if the seismic is not performed. Also, you would want a professional lease form with your acreage position.
The target is deep yegua and the wells in Jefferson have been fabulous. Bona fide barn burners.
Buddy Cotten
I concur with Mr. Cotten’s insight: if you don’t already have it, you need professional intervention and representation in acreage of this magnitude located in the emerging high-stakes Deep Yegua arena
I'm not trying to be contrary to the advice above, but I worked this area for a large company for quite some time. A very wise man once told me there is no such thing as a Yequa development well. That trend is notoriously risky with some wells being barnburners and the offset well a dry hole. The point being why give them the option at all? If they are interested now, make them pay full price for the extension now. I would concur that legal advice would be worth your time and money, but I would also advise to lease as much acreage as possible, for the most royalty and bonus possible and simply tell them an option is not in your best interests. FInd out who else has leased in the area, contact them and shop the offer a little. You can locate the guy to talk to by asking for the land manager for that area.
Good luck
Ed
