gas lease proposal

my thought there is if they hit on the unit ( which my 28 acres is a part of ) then the drilling company is going to want to protect their investment by grabbing the remaining property surrounding the unit. now we would be talking about a significant increase in the per acre lease price on the remaining acreage. it also leaves the property open for other exploration companies that may find the property attractive.

This is one of those truly risk reward properties. I think I would lean more to option 3 though. Mineral owners always make more money off the royalties as compared to the bonus. Take the cash because with today’s market, I highly doubt people are going to be aggressively developing any area. If you want more leverage push for no cost royalties. You can avoid taking on marketing, processing maybe even some operating expenses from the revenue stream they will “share” with you. Additionally, there really is no such thing as 28 acre spacing, you’re going to be pooled into a 640 acre unit and your royalties will be allocated this way. Remember, most wells drain 80-160 acres, so you may be getting your 240 “drained” without pay. Congrats on being one of the chosen ones to have valuable royalties - color me jealous.

Find out the highest bonus and royalty being paid - royalty is more important than bonus when we’re talking this low of dollars. Last and most importantly, eliminate the option for the extra 2 years. That option will only be exercised if the lease exceeds current market value - it is a free option to the buyer of the lease. What if the lease is worth nothing in 3 years? They don’t exercise their option. What if it’s worth $2000/acre 3 years fron now? They exercise the option for $200/acre and you could’ve gotten thousands more from them or another operator.

It’s probably EOG. I’m assuming you’re in north Colorado. If I’m correct, eog just completed a monster gas well called the tonkawa and are aggressively leasing. They play hardball and 160 AC could easily be bypassed in this play. I would ask for 23% and 400/ac and settle for 22% (this is their top RI number, I guarantee) and 300-350/ac.

Also, royalty is always what you opt for over bonus unless you’re cash strapped.

its EBR Energy

I’d counter with the full 160, minus the 2 year option, at $250/acre and 20% royalty.

Not trying to hijack the thread but I inherited a royalty interest along with a smaller working interest in a producing field. They both pay every month, but the overall WI value has always been vague to me.