Oil/Gas/goinbg rate for lease in Section10-1N-20ECM
Hi Mark: My client received an offer to lease land in Section 10-1N-20ECM. A bonus of $450.00 per acre has been offered on a three year with a 3/16 royalty. I have no clue if this is fair or if I should ask for more bonus or royalty. Can you help me? Richard
Unfortunately, I cannot afford to answer questions like this one for free. The proper way to establish a market value for an oil and gas lease involves some research to learn the nature of the prospect (production on surrounding areas, for example), the likelihood of payout, and the expected quantity of payout; and perhaps obtaining the opinion of a geologist or at least talking to a knowledgeable landman who is active in the area, all of which takes time and money. One property may bear a lease bonus of $1000 an acre or more while an adjacent one may have a value of $100 per acre or less. You probably all of this already. Have any wells been drilled in the surrounding area recently? Have you asked a landman what is the most he has paid for a lease in that county?