Replies to This Discussion

Permalink Reply by Skip Peel - Mineral Consultant on October 16, 2013 at 10:25

The Wilcox group is shallower (above) the Tuscaloosa Group.  Every split royalty lease offer I have dealt with has had the lower royalty for the actual development target.  More details would be required to comment on the bonus and lease term.

Permalink Reply by TMS Lease Hound on October 16, 2013 at 11:06

Recordman, Ya need to get in touch with D. Wilkerson, attorney in Woodville. Going for more in that area. How many net acres ?

Permalink Reply by Recordman on October 17, 2013 at 4:10

Thank you Skip! I appreciate the information. Oops, this was meant to go below Skip's post!

Permalink Reply by Skip Peel - Mineral Consultant on October 17, 2013 at 4:37

You're welcome.  One other thought that I would like to pass along deals with a lease term.  In areas where the target formation is an unconventional zone and has the potential for a resource play operators have discovered the hard way that 3 year primary lease terms are often insufficient to allow follow up development.  In other words once development commences it is unclear how far the productive zone will extend and how many wells it may take to drill it all.  This was a big problem in the Haynesville Shale and operators have adjusted accordingly.  A 3 year lease term used to be considered sufficient for any exploration target.  Now some operators want a 4 year primary term and a four year option to extend (see Southwestern Energy in the Brown Dense prospect).  I would never suggest that a mineral owner potentially tie up their minerals for 8 years unless the bonus was at a premium and the acreage was substantial.  A 3/2 is okay as is a 4 or 5 year primary term or a 4/1 but I think 5 years is more than enough to allow for contingencies in drilling to hold leases in a successful play.  In an unconventional prospect I would expect the bonus per year to fall into the range of $150 to $175 per acre per year for a primary or an extension term.  As always all lease terms are negotiable and nothing is set in stone.  The preceding is my take on what I am seeing currently in a number of unconventional prospects and plays.

Permalink Reply by Recordman on October 16, 2013 at 11:16

We have about 15 net mineral acres in this area. Do you know of anyone getting 1/4 royalty?

Permalink Reply by M T on October 18, 2013 at 5:30

Lease hound,

What kind of offers have you seen in Wilkinson County?

We still have some unleashed minerals on property when they have leased most all the other mineral owners.

Thanks