Can anyone give me guidance on current offers around S36, T1N, R02W. Any guidance on Lease companies like Redsky Land or MK and P?
We have used RedSky Land over the years. You need to negotiate with them to get the best per acre price.
Steve R. Sabol - One of trustee’s for the Durham Trust
Thank you, Mr. Sabol.
There is discussion in another thread about MK&P. Very hard to get in touch with. Be cautious with anyone who is not easy to find.
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I contacted Red Sky and they were most helpful. The offered a small in bonus for 1/5 royalties on a 3 year lease with option for 2 more years. We haven’t received the actual agreement yet as this was just over the phone.
From what I read on this forum it sounds like drilling may take place on Secs. 35 and 36 of 1N-2W in the near future. Any thoughts on that possibility, and what are the main issues to be concerned about in the agreement for the lease when we receive it?
If you believe drilling is a strong possibility, I would prefer to increase the royalty to 25%, even with no bonus.
Shorty
Red Sky is working for Continental. Personally, I never accept a two year option. Too much can happen in the meantime and the ball will be in their court on their terms, not yours. Unlikely to get 25% in that area. The Continental lease is all in Continental’s favor and not yours. The Main Issue is the post production charges. OK is “an implied covenant to market state”. Companies have to get your product to market without charging you-unless they change the terms in the lease. Watch what that lease says because it is probably going to try to charge you. You need to limit the shut in time frame, no two year extension, no top lease clause, no post production charges, no warranty of title, get a depth clause, get a commencement of drilling clause. Not giving legal advice, just making suggestions about area to be concerned about.
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Thank you that is very helpful. I’ll look for those clauses in the agreement and see what we can do. If a 25% royalty is unlikely, isn’t the issue with a two year option mostly about being able to renegotiate for a larger bonus after 3 years, unless you feel that I’d be in a much better position to change many of the standard terms of the lease agreement then. In other words, if I’m able to negotiate many of the issues you stated above now to my acceptability, would I be better to accept the two year extension now since I’d be unlikely to do better 3 years from now.
Are leasing agents authorized to negotiate these items or will they have to bring in someone from Continental?
Again, thanks for you insight. This is pretty daunting for someone not familiar with Oil & Gas and OK laws.
If you do not nail down the future bonus, it will be total on their terms, not yours. You need to change many of the clauses in the lease form and that operator is not going to be friendly about it. The leasing agent works for Continental.
You can also try to lease with another company which may be easier to work with.
You can also wait until forced pooling which has its own advantages and protections.
Suggest you read the Mineral Help Tab above and also get the little booklet called Surviving Forced Pooling in OK from the OCC or NARO.