Hope I am posting this the correct place but I learned today I have one acre in Sec 19 14/14 that’s never been leased. I purchased it about 3 years ago from the owner. I am receiving royalties from it so I didn’t know it wasn’t leased. The guy who called wanting to lease it said they are getting ready to drill 2 more wells in Sec 18 14/14 that will run through Sec 19. I don’t know. But my question is should I lease it and what will be a fair amount?

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I am also receiving calls about 3 unleashed acres in 14 14 6.   So I am assuming one of them is coming north from 18.  If you can wait a few months until the well pays your portion of the initial drilling costs your royalty checks will be 4 times larger than the 25% that they will offer you.  
They only offered me $2000 per acre.   Good luck

James, if you are receiving royalties, your one acre is burdened by a lease.  So you can't lease it to whomever is making the offer.  There are a lot of uninformed offers out there currently by buyers with no history when it comes to Louisiana mineral law.  If you are receiving "production payments", then you are unleased.  There is a difference between the two.  There may be unleased acres in this or the other sections/units covered in these new wells. 

TK, yes two of the SWN wells include your section 6.  You are correct that remaining unleased will provide you with four times the interest compared to a lease with a quarter royalty but there are other variables to consider.  I expect these wells are already completed and possibly turned to sales now since the last SONRIS report is six months old and the work permit for the frack was approved 10/10/2022.  Before any unleased interest in the wells would receive any income, the well(s) would have to payout (recover the cost to drill and complete).  One of the major determinants of payout is the price of natural gas.  These wells will be entering a prolonged period of low natural gas prices.  Since these wells produce 75 to 80% of their lifetime volume in the first 24 months, doing so at low prices could mean you receive no income until the wells are already depleted by that percentage.  Also the bonus is the least important lease term and a $2000/acre bonus is in line with current leasing for all Haynesville interests especially for small acreage.  Don't get caught up in thinking that somehow that is a low ball offer, it's not.  The more important lease term, especially for proven minerals with potential for Bossier reserves, is the royalty fraction and other protective and beneficial lease clauses.

James, if you are receiving "royalty" then that acre is held by an existing lease.  When you purchased the acre, it was likely leased and the seller did not reserve their mineral right.  If you are receiving "production payments" then the acre would not be covered by a lease.  Louisiana mineral law allows an operator to keep the proportional share of income attributable to an Unleased Mineral Interest (UMI) until a well recovers 100% of its cost to drill and complete.  After that a UMI would receive production payments and be charged for their share of Lease Operating Expenses (LOE).  The guy offering the lease maybe able to help you figure out which you are.

TK, first $2000 bonus per acre is pretty good at this point in the play and has been for some years especially for such a small interest.  The bonus is the least important term in an O&G lease.  In most cases, and in yours, I prefer for mineral owners to have a lease.  One that they get some professional help to get right.  Although you are correct that going unleased would provide four times the well interest as a lease with a one quarter royalty fraction, there are other significant considerations.  These wells produce some where around 75 to 80% of their lifetime production in the first 24 or so months.  If the price of natural gas is high, those wells may payout before 24 months but if the price is low, as it is predicted to be over the next 12 months or so, you may find yourself getting in pay with only the remaining 20% of production in a largely depleted well.  Then as a UMI you will get pencil wiped on your LOE costs by the operator.  They will charge you for cokes for the break room, copy paper for the copier, cutting the grass, etc.  Having a good lease simplifies everything and gets you income during that good 24 month initial production period.

Skip thanks so much I will ask him but I see what you are saying but I am receiving payments on that acre. He offered 2500 and 25% royalties. If I lease will that make my payments smaller that I am getting now  when I lease or will it start with new wells only? Skip I really take all your advice to heart if it was you what will you do? Will you stay as is or lease

Thanks for sharing, Im trying to find out the same information about fair lease amount as this is new to me. I didn't want to just sign to fast, but the 2000 offer is what I'm being offered as well. 

Lease bonuses currently run from $750 to $2000 per acre depending on specifics.  No one who doesn't own a hundred or more unleased acres in one section need expect more.  The bonus offered traditionally depends on competition.  That's what resulted in the crazy bonus offers in the first few months of the Haynesville Shale leasing.  That craziness ended in September of 2008 although the memory of it lingers to this day with many people.  Competition for leases is rare now.  Forget the bonus.  It is the least beneficial lease term.  I would trade away 100% of my bonus for a better royalty where the Haynesville or Haynesville/Bossier is proven.

Thank you so much for this information this helps out so much.

Thanks to all of you all because I know very little about all of this but he called yesterday for the first time offer 2000 said he will do 2500 and 25% royalties but I told him I was receiving payments but he said it was never lease because he guess they couldn’t get in touch with the original owner in Hawaii

James, no offensive but that makes little sense.  Beware.

James, here is a link to the unit survey for your section.  Click the link and review the tract owners to see if you are listed or the person you bought your acre from is listed.


Ok thanks skip yes I see the original owner name on there.


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