Expert: Frederick M. - 11/7/2009

Question
I was recently contacted by Bagely Title, Inc. re: 4 net acres of minerals I inherited in Kay County, Oklahoma, (S1/2NE1/4 of Section 7-T27N-R5E).  They have offered me the following options:
1.   Lease the minerals with a 3 year term and a 1/8th royalty for a bonus of $50 per acre
2.   Lease the minerals with a 3 year term and a 1/6th royalty for a bonus of $25 per acre

I have no experience with this and therefore unable to judge which, (if any), of these options is proper.  Should I / can I negotiate for more?  And if so, what do you feel are the terms I should try to for?

There are no other terms in the letter I received.  Is there more I should be concerned with?


Answer
Ken, I'd tell them you'll lease for $75 and 1/8, or $50 and 3/16 royalty; both three years with no extension. If they squawk about it too much remind them that Section 17 (immediately SE of your Section 7) was leased and force-pooled for those amounts in September.

Hope this helps you out.
Frederick M. "Mick" Scott CMM RPL
Timbercreek Mineral Company, LLC