Hi there-
Always counter an initial lease offer with your ideal desired terms. The worst that can happen is the leasee will refuse to change any terms but more often than not they will agree to much of what you request or at least counter with revised terms that are somewhere in the middle of where they started and you asked.
Some of our standard counters include:
-An increase to the bonus offered- reasonable to just high of reasonable- never hurts to ask as they usually have some wiggle room. If they started at $1k you could ask for $2K and hopefully get closer to $1,500.
-1/4 royalty (always ask for 1/4- this is more imp than increasing the bonus offer)
-A shut-in rate of $xx (not sure of going rate in Lea at present- anyone have thoughts?)
-Royalties paid at the well head with no deductions for anything (see example standard lease language below)
-Inclusion of standard Pugh clauses (also see example language below- this often gets edited by the leasee in some way but ends up being more fav. than typical operator lease language which usually ties up all minerals if they can)
-No lease extension/Or a 2 yr lease extension but only with a re-negotiated bonus
We have a standard lease document that our lawyers put together and we usually request that it be used. This ensures that all language has been vetted by our side rather than having to review an operator lease template. Not everyone has this of course so using the Operator lease is fine but would recommend having an O&G lawyer review as it will ensure unwanted language doesn’t slip through.
Good luck!
-Example Deduction language:
Price shall mean the net amount received by Lessee after giving effect to applicable regulatory orders and after application of any applicable price adjustments specified in such contract or regulatory orders. However, Lessee shall not deduct from the royalty paid hereunder any charge for compressing, treating, purifying, or dehydrating such gas (whether on or off the lease premises) or transportation of gas off the lease premises, or for the separation, stabilization, manufacturing or measuring of oil, gas or other hydrocarbons covered by this Lease. It is the intent hereof that Lessor’s royalty on oil and gas produced hereunder shall be free of all costs incurred with respect thereto by Lessee or any third party beyond the wellhead connection.
Example Pugh Clause Language:
Notwithstanding anything herein to the contrary, on the expiration of the primary term this lease shall expire as to all lands not committed to the proration unit for a well producing or capable of producing oil and/or gas in paying quantities and as to all depths within such proration units lying 100 feet below the stratigraphic equivalent of the deepest producing depth, and 100 feet above the stratigraphic equivalent of the top of the deepest producing formation, in such proration unit unless Lessee is then conducting actual drilling operations on the lease premises or lands pooled therewith. In such event, this lease shall continue in force and effect for as long as Lessee continues to develop the lease premises with not more than 120 days elapsing between the completion of one well and the commencement of actual drilling of the next well. Upon the conclusion of Lessee’s continuous development operations, if any, this lease will terminate as to all lands not within the proration unit of a well producing or capable of producing oil and/or gas in paying quantities and as to all depths below 100 feet below the stratigraphic equivalent of the deepest producing depth, and from the surface down to 100 feet above the stratigraphic equivalent of the top of the shallowest producing formation, in each proration unit.