Deciphering Lease language:Sec 23:Township 15N,Range 2W (S2 South half)

Oklahoma Mineral Rights Logan County, OK
1

Hi all,

As new Mineral Rights owner, could use help deciphering lease offer language. The current offer for my family’s 320 acres in Section 23, Township 15N, Range 2West states it’s at “65.6667 ac”. What does that mean exactly? Also, what does “$2/ac delay rental” added to that mean?

Appreciate any help, Carla

2

Carla,

It sounds like you have 65.6667 of mineral under the 320 acres is all. Someone else owns the rest of the mineral.

Leases in this are are going for $450 to $800 per A with 3/16 to 1/5 on 3 year terms. I would not sign an extension. Sounds like a landman is really trying to take advantage of you. Wait it out for a better lease.

You may want to run the lease by an oil & gas attorney before signing if you are real new to leasing.

delay rental
1. n. [Oil and Gas Business]

Consideration paid to the lessor by a lessee to extend the terms of an oil and gas lease in the absence of operations and/or production that is contractually required to hold the lease. This consideration is usually required to be paid on or before the anniversary date of the oil and gas lease during its primary term, and typically extends the lease for an additional year. Nonpayment of the delay rental in the absence of production or commencement of operations will result in abandonment of the lease after its primary term has expired.
3

Carla,

Do you mind stating what oil/gas company is offering you this lease?

Clint Liles

4

Sure - company is Devon. I have actually done out reach to couple other companies such as Blue Dolphin via Everett Nix. They aren’t offering anymore as told our particular section currently outside hot spots.

5

Carla,

If you don't need to lease (money) right now, I would wait them out a little bit. Maybe someone else will come by and make a better offer. They will tell you they aren't paying more or giving better offers, but if you tell them this is what you want, you will probably hear from them within a month or so.