re: Going rate for leasing land for exploratory drilling.

Depends, are the looking to lease your mineral rights or do they plan on using the surface for a drill pad. Depending on where you are located it could be anywhere between $150 an acre with 18% royalty up to $15,000 per acre and 25% royalty for mineral rights. Surface use is a whole different animal.

Be smart. My uncle who is a CPA for this small firm here in Houston are literal billionaires b/c of a similar situation.

Dad died about 2 years ago and his kid(s) netted 500M immediately. He was a frosh at Ole Piss and shortly realized that an education would be a waste of his time

Is it vacant land?

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Is it vacant land?

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No. My moms house is on it.

I'd say $250/acre with 25% royalty but times are lean right now, they may not get there. I'll tell you this for sure, their first offer will not be the last one.

its a wonderful thing.

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He said if anything was found a seperate company would be the ones to negotiate royalties.

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I'm in the business. That's not how it works at all. You agree to a bonus and royalty ahead of time. You don't negotiate a royalty after they drill and have already hit.

It's hard to know what would be a good offer without knowing what they're looking for. Post again after meeting with him.

(no message)

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I did some exploratory drilling on your mom once.

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well done, sir... well done...

Here's my free advice. Take it for what it's worth:

1. Ask the broker the name of the operator that he is leasing for. Knowing whether it is Exxon or some speculator who will flip it is information I would want.

2. Ask the broker what are the lease boundaries he is leasing (entire counties, parishes, townships, 640 acres, 320 acres, etc.). He's been given a map with a boundary of what the operator wants. That's knowledge I would want.

3. Ask the broker how many acres has he leased up already and what are the ranges of the lease terms (upfront bonus payment you get day 1, retained royalty percentage you get of your acreage's contribution to the well(s) drilled, annual delay rental payments you get each year to keep the lease going under its primary term, term of lease which is how long they are tying you up for). If he's just starting to lease the area, he will be back. I would think that if you only have 16 acres, he's probably been leasing for a while and is now filling in the open spaces on his map.

4. No matter what he offers you, tell him you need to review the actual lease (document) with the family attorney and get back with him.

5. Contact the neighbors and determine if they own mineral interest and if so have they been contacted. Negotiating as a larger lease block should be more favorable to you and your neighbors. They may have already leased and if they would tell you their terms, that is information.

6. Once you have information like this, you can make a more informed decision. 16 acres is not very much which is not necessarily bad though. If you are certain they will drill, you don't have to lease and they will then have to make a decision whether or not they will drill without your interest. If they do, you will get to keep 100% of your 16 acre mineral interest and depending on what contribution your 16 acres has to the spacing unit of the well, you could be way better off. However, if you lease you are guaranteed the bonus and if they never drill, you made a good decision by leasing.

Understanding you only have 16 acres and don't have much negotiating power, here is a very important point concerning royalties to at least ask him to send the message you are somewhat informed. Ask him how the lease defines how the royalties are paid. This is negotiable and very valuable. At a minimum, he will know you understand it some. For example, which costs can the operator deduct before determining how commodity pricing on royalties are determined. Is it the net price the operator gets or the gross price? If it's a true royalty, you should get gross pricing. You should argue to not pay for things like "transportation costs" of the product to get it to market. If wet gas, is it before the ngl's are taken out or after? You want after since ngl's are typically worth more than methane and as a royalty owner you should be cost free so the cost to strip iut liquids is on the operator and not you. What about fuel use? Is your royalty before lease fuel? You should argue if it's a royalty, it should be. I put this paragraph in by itself since only having 16 acres doesn't give you much leverage to negotiate these things but knowledge is power.

If you don't need the money, I would consider not leasing and if they drill a well that can justify carrying your 16 acres, you could make significantly more being payed on your full royalty that you own rather than leasing most of it away for bonus dollars. If you need the money, leasing under the best terms you can is the least risky and you get paid regardless of whether they drill a well.

Anyway, best of luck and I'm sure your mother is glad to have you helping her.

Oh yeah, one last thought. You could ask for a "favored nations clause lease" which means you will get lease terms equal to the best deal terms in the area in the near term. These might be difficult on 16 acres but I would discuss with him. You would need an area like a county/parish and also a timeframe like within 2 years of lease date.

Sorry for typos ... and sorry so long.

Get an attorney before you speak to them again.