We have received a lease offer to explore in the Morrow formation (quoted as 7296 feet) under existing production (Range Resources Watson #1-18). The location is identified as Beaver County, Section 18, Township 1N, Range 20 ECM and contains 316.22 acres. A close relative and I each have a 52.705 net acre mineral interest or approximately 33% of the total.
My questions are:
- Has anyone had dealings with Lessee, Strat Land Exploration Co. of Tulsa, or the person negotiating the lease, McLinn Land Services of Edmond? I found very little information when I googled them other than they each appear to be relatively small. Strat did appear to operate more than 10 wells in the Texas Panhandle and claimed experience in developing within Morrow fields.
- I have very little experience in leasing in general and none with leasing under existing production, so do the terms of $125 per net mineral acre for a 3 year paid-up lease with a 3/16 royalty interest seem reasonable? I have some indication that another lease owner received a slightly higher bonus offer. My previous leasing experience was that dealing directly with a larger company yielded a much higher offer although I understand the difference can be explained by timing of renewed interest in the area and that the smaller companies, landmen, etc. perform a critical role and need to make money.
- I was concerned to learn through the comments I read for the different groups that one could send a completed lease and then never receive the promised payment. Fortunately, the other 3 leases than we completed were without problems. One of the transfer options offered by McLinn was to take the executed lease, draft, and W-9 to my bank's collection department who would forward them to the lessee's bank for collection. Does this procedure prevent the payment receipt problem?
Thank you in advance for any background and advice any of you can provide.
Jeff Gale