Oil & Gas Lease Bonuses: Beginner's Guide for Mineral Owners

Today we're looking at the Lease Bonus: the money a mineral owner is paid for an operator to have exclusive rights to drill and produce their acreage.

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CHAPTERS:
0:00 Analogy to housing
1:40 The Lease Bonus
4:10 Pie of the revenue
8:41 Logistics of Leases
9:39 Net vs gross acres
10:35 Paid-Up leases
11:08 Options (and my rant on them)
14:01 Brady
14:40 Definition of “bonus”
15:06 Market value from lease bonus

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CONTACT ME:

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The Mineral Rights Forum (I answer questions here often)

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PECAN TREE OIL & GAS: Pecan Tree was founded by Tracy Lenz as a Limited Liability Company in January 2020 (registered Texas Engineering Firm F-21124) to bridge the gap between mineral owners and the confusing, high-dollar world that is oil and gas. After being on the operator side for over a decade, Tracy witnessed firsthand how mineral owners rarely can afford the same data, experts, or software to be on a level playing field with the operators and buyers, yet have MORE at stake when deciding what to do with their minerals. Pecan Tree’s focus and efficiency make these resources available without a hidden agenda. We don’t buy minerals, we don’t work with billion-dollar companies, and we aren't private-equity-backed. This flexibility lets us innovate with technology, maintain the highest standards (work quality, customer service, and ethics), and tailor pricing and scope to each client’s specific needs.

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ABOUT TRACY:
- Licensed Professional Engineer in the State of Texas, PE# 132654
- Certified Mineral Appraiser by the International Institute of Mineral Appraisers (IIMA), #2020-06
- Master of Science in Petroleum Engineering from the University of Southern California
- Bachelor of Science in Petroleum Engineering from the University of Texas at Austin
- Experience with oil & gas minerals in Texas, Oklahoma, New Mexico, Louisiana, North Dakota, Montana, Utah, Colorado, and Kansas.

[omarichoyce]

Thank you for your knowledge and guidance in these matters, you make it very easy to understand a lot of the terms and the overall process of this very confusing game, thank you🙏🏾

[bccak]

Do you do consulting? I would love to chat. Please let me know

[thenapierfamily]

My wife and I just found out by mail that we are going to be owning mineral rights passed down from her grandpa. These rights are going to be split up 6 ways because mothers have passed and they go to the kids next. Anyways, we found out because Antero Resources is planning stages of drilling for oil and gas where these rights are. We do not own the land, just the rights. We do not know much about anything right now because this is so new to us. I certainly hope it can be life changing for us in a good way. Do you think this could be a great thing financially for our family's? The mineral rights are located in Doddridge county West Virginia. Any advice on this would be greatly appreciated. I have been watching your video's to figure out some of this. Thank you for making these detailed video's to help.

[billwalker]

Thanks for the info. Sisters & I inherited land with a gas well Dorman for 20 years in Dimmit county, Texas now we are recieving interested in this well. We know very little about negotiating and what we should do. A man is coming Monday to talk. Please help me.

[HoneyBee-zhzw]

Because me, my mom and my four siblings didnt know anything about an oil company wanting to drill on my moms land, she let her youngest brother handle it for her, this was about 2 to 3 yrs maybe longer, before she passed from her fight with cancer. She's been gone now 4yrs and i haven't been intrested in searching to find out what happened about that mineral situation as my uncle has not even mentioned anything to us about it, 🤔...
I don't even have the money to start any research let alone pay attorney's to find out for me, and to ask my uncle is not an option because we or they have alienated themselves from us, so there is no kindness on their part to talk like adults and find out anything from my uncle. We are from Carlsbad, NM by the way👍

[KimberlyA]

I live in midland and I’m learning everything I can about everything in oil and gas I want to become a landmen.

[gustavovalladolid]

I think that they want to hold on to the lease with options without producing anything because they might have an Adjoined property that they might be paying less on royalties and bonuses, and since it's close to the subject property, they might be able to extract the oil underneath that pool of oil those properties sit on, and not let another oil company have access to the oil. Maybe, just a thought.

[greenbeginner]

The big questions to a newby like me is, (1) how could I ever know who wants to lease my property and (2) how could I know that they're legit and (3) how could I ever know how much I should require? My 'rights' are sitting somewhere and I haven't received a check in nearly 20 years. Do I hire a transaction lawyer or something?

[clairebeane]

Yeah, I was just offered a five year lease option with an insulting dollar per acre bonus with an unending lease option for the lessee with no options for me if I sign for the dismal bonus they offered me once signed. Ugh, I kind of hate this, but I also kind of love this.

[quoderatdemonstrandum]

I don’t sign any oil & gas lease for any less than 1/4 royalty interest

[henryromero]

You talking percentage Royalty but you are not saying in a pooling unit the percentage drops. Or does it not?