Hello, I joined this forum months ago but never posted. My grandfather purchased some mineral rights for me and my brother in the 80s.
A woman contacted me on LinkedIn and made me an offer. Here are some of the things she wrote below. She also made me an offer. I am clueless and have no opinion. I would love to understand it and get some advice.
I work for a company called AQYRE, out of Denver, CO. We represent Liberty Resources in Burke County, ND. Liberty Resources has drilled 20 wells in ND over the last 3 years and is still going strong.
*I would like to mail lease offers to you and your brother. It looks like you each own 4.00 net mineral acres. I don’t have a copy of the conveying deed but it was from 1980. It appears that you and your brother were minors when you were vested with this interest and that is why your father was Trustee. The title chain will need to be corrected now that you are adults. I will check with one of the attorneys in our office and find out what needs to be done. I’ll include that information with your lease offers. *
*We are currently offering $300/net mineral acre for a 3+2 year lease and 18.75% Royalty on producing wells. If you could please send me your addresses, I can mail the lease offers to you. *
Here are the coordinates I believe.Township 161 North, Range 93 West 5th P.M.Section 15: NESection 16: NE
Again, I have no understanding of this so please enlighten me.
Janelle
They are offering to lease your minerals for 3 years with an optional 2 year extension. They will pay you $300 per acre for your 4 acres and another $300 per acre if they exercise the extension. If they establish production they will pay you 18.75% of the value of whatever oil and gas is produced for as long as it is produced. If they don’t establish production, your minerals will be freed up at the end of the primary term ( 3 years or 5, depending on the extension option).
Because the minerals were originally in a trust, there will need to be some paperwork to establish your direct ownership before the lease can be executed. Sounds like they are willing to walk you through that.
Liberty is generally regarded as a reputable operator.
All in all, I’d say that was a pretty decent offer in today’s environment.
If you were minors at the time of purchase, then you do need to get the title corrected at the courthouse. You can contact the Burke County oil and gas clerk and ask what they will require. Usually best to do it directly yourself without a middle man unless it is your own attorney. Then when you get the offer, you can compare what “their attorneys” require.
On the offer, I generally do not lease for more than three years and I do not allow the option for the second time frame. Too many things can happen within in three years. Look at the last three months! The current offer is for 3/16ths royalty. Given that most ND leases have post production costs, I always ask what they are leasing for at 1/5th and 1/4th royalties. The bonus will be lower, but I prefer to have better royalties. Sometimes, they are not offering those options, but it doesn’t hurt to ask. Do not lease both properties on the same lease. Do separate leases for each section. Also, the first lease they send will be all in the lessee’s favor. It will need some negotiation.
AQYRE has leased quite a bit in that township. However, there are other companies to contact. Lincoln Energy Partners II LLC and Rockall ND LLC. Given the drop in oil prices in the last month, not sure how active anyone will be in the near future. This will give you time to get your title chain perfected.
Our family was approached by AQYRE also. We decided to run it all past our lawyer. AQYRE does not have a great reputation on how and when they do pay up the leases. We decided NOT to go with AQYRE and wait for another lease offer.
One came in from Lone Tree Energy with Rockall/Petro Harvester. We had JUST signed our leases and sent them back when all this went down now in March.
I doubt they are signing anything new right now, and would imagine most companies are retracting their offers at this time?
We had our lawyer in Powers Lake, Amber Fiesal look over our lease and counter what we wanted in it per her recommendations. We too, do no option years. Just a straight 3 year, and we went with a higher royality verses $ per acre on lease.
Do a search in these forums for AQYRE. You’ll find other discussions. M_Barnes has great suggestions and insights.
Best of Luck!
Ok, Thanks for this. It looks like the best thing to do is to get the title changed to my name and my brother’s and then just wait to persue a lease when the economy is better.
I really appreciate the help.
Janelle
Sorry, One more clueless question: When they say $300 per acre, i assume that is $300 per acre a year? Or they would pay $300 per month. It sounds a bit vague in the word smithing above.
Janelle
Usually, the amount is a one time payment for the whole three years (or whatever time frame) primary term and a one time payment for the extension time frame.
Personally, I would not do the extension as who knows if $300/ac is reasonable in three years.
Hi,
It is $300 an acre for the 3 year lease. If you have 10 mineral acre’s, that’s $3000 for your lease for the 3 years. It’s paid once to you. You need to have a lawyer look over what their generic lease says as the lease any company gives you, is in their favor, not yours. So many variables to add and take out of a lease. Again, we were advised not to go with AQYRE… I hope you do your homework on them as a company before you sign. As far as that goes, do your homework on any company. If and when the oil comes back, I would hate to be with the wrong companies and have my minerals tied up with them for 3 years. No options remember! And Royalties are important to get as high as you can. Again, this is what a lawyer will help you with. First get those mineral acre’s in your name and go from there. Plenty of time right now to NOT be in a rush to sign with any company.
Beth
Thank you for the reply. I inherited the rights…but my other sibling chose to sell his a year ago without identifying that action to me. I’m sure at some point there will be a rebound. In an “oh well”, it remains to be seen but appreciate the comment.