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Oil/Gas/Lease offer


I have received an offer to lease 6.667 acres in Stephens County (Section 29, Township 2 North, Range 4 West)  Seems to be a lot of interest in Stephens County and I'm unsure of how to evaluate the offer.  They have given me 4 options:
  1.  To participate
  2. $1,700 bonus per acre plus 1/8 net revenue interest
  3.  $1,500 bonus per acre plus 3/16 net revenue interest
  4.  No bonus and 1/4 interest.
Based upon what you know of what is going on in Stephens Co., what would you advise?

This question was in the pool and not assigned to me so I thought I would pick it up and see if I could provide some answer.

If you choose to participate you will be paying your share of all the costs and exposed to the liability of the well.

I don't think they can offer you no bonus and 1/4 since something would need to be paid as consideration for the lease agreement.

Your response should be to make a hybrid of the options - there are no hard, fast rules.

If there is nearby production then the higher royalty will be more profitable for you.  If the production is more than a mile away then I'd take the higher bonus and lower royalty since is will be less likely that they will hit oil or gas.  


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Cliff Williams


I will try to answer any question you have. Even if I reject a question, I still will give a shot at what I would do in your position. The only questions I will not take a shot at would be a highly technical engineering or geological question. I am beginning to see quite a few questions from land men and other oil companies and that doesn't matter to me either. I will attempt to help.


I am an oil and gas attorney that has been in the business for more than 20 years. I have held a series 22 and 63 securities license, been in oil and gas operations, land man, division order analyst all prior to obtaining my law degree. Today, I typically write title opinions verifying ownership of oil and gas minerals, assist landowners in negotiations on oil, gas and mineral leases, easements and conveyances. I also assist oil and gas companies with the sale of working interest ownership as well as common business law issues.

State Bar of Texas, Member of the Tarrant County Bar and the Dallas County Bar Associations.

Multiple oil and gas topical columns on

I have a B.S. degree which I rely upon more than my Business Mgmt degree or Law degree...

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