Lease Bonus Estimate✤
$180
Range $50 - $270
!
✤This tract might not be leased or, if leased, is not yet held beyond the primary term by a
producing well.
The Lease Bonus Estimate represents our calculated target paid-up cash bonus that should be expected when
leasing the right to drill the tract to another party for a 25% royalty with a 3-5 year primary term.
Lower royalty rates (12.5-22.5%) should expect a higher lease bonus in return. Other terms of the lease can also affect the negotiated bonus, such as a continuous drilling clause, depth limitations, and post-production costs.
Lower royalty rates (12.5-22.5%) should expect a higher lease bonus in return. Other terms of the lease can also affect the negotiated bonus, such as a continuous drilling clause, depth limitations, and post-production costs.
$
We recommend always negotiating the HIGHEST royalty rate possible, with 25% as the gold standard. A 25% lease has twice the value of a 12.5% lease.
!
A lease is often binding and non-negotiable after signed, and can be held in place by a producing well on the tract
for decades! Take your time to understand how all the lease terms affect your tract value. Better yet, seek the
assistance of an oil & gas attorney.
The Impact of Royalty Rate on Lease Bonus Estimates
| Royalty Rate (%) | Royalty Rate (Fraction) | Lease Bonus Estimate ($/acre) | Lease Bonus Estimate (total for 1 net acre) |
|---|---|---|---|
| 25.00% | 1/4 | $180 | $180 |
| 22.50% | -- | $200 | $200 |
| 20.00% | 1/5 | $220 | $220 |
| 18.75% | 3/16 | $240 | $240 |
| 16.66% | 1/6 | $270 | $270 |
| 12.50% | 1/8 | $360 | $360 |