Replies to This Discussion

Permalink Reply by Bobi Carr ("parker") on August 13, 2009 at 14:03

What is your Section, Township and Range?

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Permalink Reply by taz on August 13, 2009 at 14:09

section 36, township 17, North Range 9 West

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Permalink Reply by Skip Peel - Mineral Consultant on August 13, 2009 at 14:19

taz. Location is important. Would you please post your approximate acreage?

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Permalink Reply by taz on August 13, 2009 at 14:23

56 acres

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Permalink Reply by Skip Peel - Mineral Consultant on August 13, 2009 at 14:39

taz. A lease bonus of $4k/acre will incur about 40% federal and LA. income tax. So you get about $2400/acre after taxes. You are on the far edge of the HS play as it is currently defined. This might be an offer worth taking if you need the cash. If not, I suggest a short wait. I'd like to see a little more activity in your township. Currently there are only 2 sections with HA unit orders in your township, 13 & 32 to Petrohawk. Do you have a township grid map by sections so that you can locate these units? Section 32 is 3+miles due west and Section 13 is 2+ miles due north. It would be advantageous if there were more unit orders in your township particularly if they were by good operators other than Petrohawk. Competition tends to increase lease offers. As I am from the bird-in-the-hand school of thought, I would look to get a little better offer but not hold out too long. If you don't get a better offer, sit tight for a few months. If you could get $6K at this time for your size tract, I would advise taking it. Just keep your lease term to 3 years and don't give an extension option. Good Luck.

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Permalink Reply by Parkdota on August 13, 2009 at 15:00

I thought royalties were taxed as income (40% if in highest bracket) but the mineral lease up front payment was taxed as capital gains (currently 15%)?

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Permalink Reply by Skip Peel - Mineral Consultant on August 13, 2009 at 15:13

Nope. Lease bonus payments and royalty income are taxed as regular income. I obviously don't know your current tax bracket so I am making an informed guess based solely on the amount of your projected lease bonus payment. You only qualify for capital gains tax if you sell your minerals. And you must have owned them for at least two years to qualify for long term capital gains (15%). The issue of taxes is an important element of your situation and the reason I brought it up for your consideration.

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Permalink Reply by Parkdota on August 13, 2009 at 16:29

Oh, it's definitely important....I hope I have to contend with it though lol. Thanks.

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Permalink Reply by Skip Peel - Mineral Consultant on August 13, 2009 at 16:33

Logan We should all be so lucky. LOL!

Permalink Reply by Bacon on September 1, 2009 at 9:01

There is a 15% credit for depletion allowance as far as the royalties are concerned though.

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Permalink Reply by dj V & A1 on September 1, 2009 at 4:59

Petrohawk offering $5000/acre + 25% in S34, T17N, 13W.

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Permalink Reply by Bear Dog on August 14, 2009 at 5:23

Skip, whats Your guess on 17N 15W S30, amount per acreage?

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