I have been offered $300 per min acres at 5% royalty for 5 yr lease in Lufkin No Option. Is this fair market value for shale?

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It must be a mistake.  Ryan, the lowest common royalty other than a specialty interest such as an Over Riding Royalty Interest (ORRI) was one-eighth or 12.5%.  That is the historic beginning of wide spread oil development about 100 years ago and has improved over time.  Modern royalty is in the range of three-sixteenths to one quarter but as more and more development is concentrated in unconventional reservoirs that range is one-fifth to one-quarter.

Actually is 1/5 Royalty. Just sering if fair market value.

I could be but there is no way to know without more information.

Shale no Oil in Lufkin
Texas. 91 min acres.
Offer $300 per acre
with 1/5 Royalty No Option
on 5yr lease.

Not bad but could use some negotiating.  I prefer 3 year primary terms but would strongly consider 5 for a better royalty and bonus.  Personally I would accept a 22.5% royalty and $500/acre for 91 acres.  It would be good to know the energy company behind the offer and royalty and bonus are not the only important terms in a lease agreement.  You've got enough at stake here to consider the assistance of an experienced O&G attorney.


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