In summary, my share of a recent Oil and Gas Lease offer on my 80 acres interest (not Chesapeake):
- BONUS: $4,000.00 ($50 per acre)
- ROYALTY: 15%
- TERM: 5 years primary + 3 year option for extension
My uncle, sister and I own 320 acres in undivided interests. Uncle 50% and sis and I 25% each. I have been tasked with working out a deal with oil company.
Here is what I got about 8 years ago for my 25% interest from Chesapeake Oil:
- BONUS: $24,000 ($300 per acre)
- ROYALTY: 18.5%
- TERMS: 3 years + 2 year option for extension
I know it isn’t accurate to compare but this latest offer appears very weak in comparison.
I would like to counter-offer a 3/2 year term at the very most and I have attached the counter-offer below I proposed a few years ago and was accepted by Chesapeake Oil.
So counter the new offer with a 3/2 year term and this attached “Exhibit A”.
What do you think?