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Question
I have been contacted by a company called Petrol land and presented with a paid-up oil and gas lease for 81 acres of land part of the William Albright survey, abstract 80, Anderson County, Texas also described as lot two in a partition deed granted from H. C. Williams in 1926, as recorded in volume 157, page 539 in the deed records of Anderson County Texas. They wish to give me a paid-up oil and gas lease for five years for a total of $795. Can you tell me If this is a normal price for such a thing? I've been told by friends that usually the lease is $150 to $250 per month for such an agreement.

Answer
Ms. Honer,

 The normal lease bonus for signing an oil and gas lease in Anderson County, TX is about $50.00 per acre.  This is a one-time payment as consideration for you executing an oil, gas and mineral lease.  If you have 100% of the minerals under this tract then you should ask the oil and gas company for $50 per acre for the lease bonus - which would be just over $4,000 for the bonus consideration.

 Paid up means that the bonus payment is total consideration for the signing of the lease agreement for the primary term of 5 years.  Now, this $795 does give them 5 years to drill a well and begin production or the lease expires and you will have another opportunity to lease with another company.  If the company does drill a successful well during this period and they begin producing the well you will receive a royalty.  At that time you would be entitled to a portion of the revenue from the well depending on the amount of production, price paid for the product and your royalty amount.  The lease agreement will tell you the royalty amount (usually in paragraph 2).  The average royalty amount in that area is between 12.5% and 16.667%.

Until the oil company gets production you will not receive a monthly check as you have heard.

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Cliff Williams

Expertise

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.

Experience

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.

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

Publications
Multiple oil and gas topical columns on ezine.com.

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

Awards and Honors
Husband and father of 26 years

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