Received option to participate, oil & gas lease or do nothing and get pooled. Township 6 South Range 65West 6th P.M
Putting in 12 wells across 2700 acres. Lease offer on my property - says for 1 net acre, $1500 bonus price, 5 years, 17% royalty. Worried about damage to my property and well. Actual wells do not appear to be on my property, but does mention " Lessee has free use of oil, gas, water and other substances produced from said land, except water from Lessor’s wells and ponds…". Read through articles on forum, what not to do, etc. Must admit - in over my head. Running out of time to sign. Have read to avoid jumping to attorney, but feels like if I don’t sign lease, will just get pooled and miss out. (Will not participate and pay out) Suggestions?
This can be complex depending on your situation. CO does have forced pooling, so that option is correct. You can of course strike any condition in the OGL as a part of the negotiation, but the Lessee does not have to accept the change. The good news is CO has become very pro-landowner. Any surface use agreement should be separately negotiated. It does sound as if you have surface and mineral ownership as a concern. If you do not lease, then the pooling will provide participation elections. If it is confusing for you at this point, you should try to negotiate the best OGL possible that excludes any surface access/usage.
Thank you so much! I appreciate the information.
You may want to consider a counter to the original proposal. Tell them to strike all surface use and access provisions. CO rules may practically prevent the use of the surface. Counter with a 20% royalty and a 3 year term with the same bonus amount. Professionals tend to go for the higher royalty in cases of multiple wells being drilled due to a generally higher economic benefit. The key is whether wells will be drilled. The Oil company may counter you with a lower bonus amount if they are willing to go to a 20% royalty. Remember to be patient. They are in a hurry and you own the property. Good luck to you.
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