Is this lease offer good?

There is no single fair bonus. It depends on the county, how close drilling is, how much of the land is offered and how many companies want it. The best public reference is what leases nearby actually paid. This page shows the figures the General Land Office has on record for State leases in each county, and a range from offers owners shared once three or more from three people are in. The State leases State land, so its prices are a reference for a private offer, not a promise of one.

The royalty is a share of production paid to you, and it is negotiated: Texas sets no minimum for a private lease. Common figures run from one-eighth (12.5 percent) to one-quarter (25 percent). Compare the offer with the royalties on the county page, and read how the lease figures it: a royalty worked out after costs can pay much less than the same percentage worked out before them.

How Texas oil royalties are calculated

It depends on the words of the lease. The Texas Supreme Court has held that a royalty on “market value at the well” allows the operator to subtract the cost of getting the product to market (Heritage Resources v. NationsBank, 1996), and that wording which keeps costs off the royalty is enforced as written (Chesapeake v. Hyder, 2016). That is why the scan quotes the sentence of your lease that sets the royalty and says which of the two kinds of words it has.

A Pugh clause releases the part of the leased land that is not in a producing unit when the first term ends, so the company cannot hold all of your land with one well. Some versions release land by depth, others by area. If a lease has none, the scan lists it as a protection you can ask for, and if the lease only names the clause without wording that does the work, it says so and quotes the sentence.

A three-year first term with an option to extend for two more years, usually by paying another bonus. During the extension the land stays leased whether or not anything is drilled. Read the option: how it is exercised, by when and at what price. The scan flags a short term with an option to extend and quotes the sentence.

Yes. The lease you are sent is a form the company drafted, and owners negotiate the bonus, the royalty, the term and clauses such as the Pugh clause. A company will often agree to changes it would not offer on its own. Members can write a counter-offer letter from the scan that raises the clauses they choose and asks for the bonus and royalty they want.

Shared offers are typed in by owners and read by a person before they count. A county range appears only when there are at least three approved offers from at least three different people, and one offer is never shown. The form does not ask your name or the address of the land, and the company name is kept for the reviewer only.

A free account can scan one lease and sees each flag with the sentence of the lease it matched. Membership scans as many leases as you have, explains each clause in plain words, gives wording you can ask for, and writes the counter-offer letter. Comparing an offer with your county is free and needs no account.

Pricing

It reads a lease against a checklist of clauses that matter to royalty owners, quotes the exact words it finds and says when it could not read a page. It reports wording. It does not decide what a clause does on your particular land, and a clause it does not find is one it did not find, not one that is missing.