My mother has 80 acres mineral rights in Woodward Co., Okla S20-22N-21W that have not been leased in years. I received an offer today from Mike Tibbets @ Land Services Inc in Blanchard Okla to lease for $100 per acre for 3 years with 3/16 royalties. Is this a reasonable offer for this area?
Karen,
I'm not sure what is a good price today, but my husband leased his land about 2 miles from you a couple years ago and he got $150. I think I would at least ask for $150. and you can always come down to $125. I would not do an extension in the lease. I think we will start seeing some drilling in that area again since gas prices are up a little bit. Some of his neighbors got about $300, but their lease run out also. They will try to get it cheap at the first and after they can't get it, they will pay more. Also, be sure to mark out and initial the part that you will pay for transportation, etc. as that can eat a lot out of a person check.
It is hard to tell without studying the activity in the area but regardless never accept their first offer. It is never the best offer.I have leased in Woodward in the past year for more.
I would suggest that you go back at them with $250 or so and 20% royalty. The 3 year term is pretty standard.
If you reach an agreement be sure that they include at least a Pugh clause and market pricing clause on the gas.
Thank you , Virginia and Dirk for the information. I fell more empowered to negotiate thanks to your advise.
kb
Karen,
I don't know how much your mother and you know about leasing, but if you don't know a lot. I would get a good Oil and Gas attorney to look at the lease. I don't live in OK, but I do have a good attorney in OK City that does my leases. Their is a lot of addendum that need to be put on a lease nowadays. If you are the surface owner, even more addendum are needed. Good luck. Beware that some land men will lease your land if they can get it cheap enough and flip it to other companies for a profit.
Virginia Pflum said:
Karen,
I don't know how much your mother and you know about leasing, but if you don't know a lot. I would get a good Oil and Gas attorney to look at the lease. I don't live in OK, but I do have a good attorney in OK City that does my leases. Their is a lot of addendum that need to be put on a lease nowadays. If you are the surface owner, even more addendum are needed. Good luck. Beware that some land men will lease your land if they can get it cheap enough and flip it to other companies for a profit.
Virginia,
Can you give me the name of the Oil and gas atty in Ok?
Thanks,
Karen