I would appreciate info regarding leases in this area. It’s 25 net acres and Columbia Holdings has made 3 offers with my preferred being 3 yr with 3/16 royalty and opt to extend 3 yrs. I specifically question the $150/ acre bonus and the McLinn Land Services employee who contacted me agreed it might be low. I didn’t see an existing discussion on Section 7 I but am new to this forum and may have missed something relative that is already posted. Thanks.
Hi Susan -
Not sure what offers are like in that area, but DO NOT take the 3 year extension.
As you can see if you look through similar Q&A on this forum, the royalty owner does not get any benefit from a lease extension (regardless of duration).
Skip that, no matter what.
Good job to challenge the bonus! :)
Our family has received the same offer from McLinn Land Services for our nma in both Hughes and Okfuskee. We have elected NOT to execute the leases because of numerous concerns, including: 1) unknown Lessee (Columbia Holdings), 2) low $150 lease bonus, 3) unacceptable 3-yr extension, and 4) questionable "Post Wellhead Costs."
I recommend that you continue your research...good luck!
Please share any findings, especially regarding Columbia Holdings.
Thanks! I have now read some forum comments about the extension option.
Thanks, Treva. The landman who is in contact with me said this area probably hasn’t been leased in 30 years although I had one back in 1989. He said Columbia is targeting gas. Any questions you suggest I ask about Columbia? Are your interests geographically close to mine or is Columbia perhaps offering over a wide area? I’ll do some research on concern #4 before I ask about that. I appreciate learning from your experience!
Hi Susan.... First contact and discussion which followed--I received same story about this area not being leased in 30 years--dealt with Section 12-9N-9E in Hughes.
Second contact was by form letter from a different landman who said: In researching the records of Hughes County, Oklahoma, it appears you own mineral interest in our area of operation. McLinn Land Services is interested in leasing these minerals for oil and gas exploration purposes under one of the following options: (#1 is the same option you were given)
Regarding Columbia Holdings: I cannot find any information about them, but the lease I received gives their address as 1050 East 2nd Street, #216, Edmond, OK 73034. My trusted contact in Edmond has not heard of the company, although she knows McLinn Land Services.
All for now.
Something is percolating in that township. Continental Land Resources has been leasing for about a year. All of those companies are leasing for someone else.
Do not take an option of any kind. Do not let them talk you into post production costs of any kind. No enhanced, no nothing. OK is a "implied covenant to market state" which means that they have to get the product to market without charging you 'unless they change the terms in the lease', so don't let them.
Make sure you get a very good lease with no post production charges, a depth clause, a limit to the shut-in time frame, no top lease, no warranty of title, a commencement of drilling clause, etc. It is better to have no lease and wait for a force pool than to have a bad lease. Of course, they may never drill, so you would give up the bonus if they never force pool.
The operator is most likely targeting gas, so ask if they are drilling vertical wells or horizontal wells. Your strategy would be slightly different. Ask them if they are the operator or if they are leasing for someone else.
Given that it is gas, $150 is not that unusual, but you can try for more. Also, it is not wise to be the first horse out of the gate when the leasing starts. They start low to get the uninformed and then gradually increase over time.
Requesting to friend M Barnes please.
I was on vacation. Did you hit the blue icon on the side and request Friend? I may have missed it.