We have a lease in Borden County, TX that expires in April 2025. The company that has the lease has offered us a lease extension for 6-months (there is no option on the lease). I have had several calls in the past from companies that were interested in this area and I told them it was leased until April '25. The lease extension offered is about 25% of the original lease payment that was for 3 years. Is a lease extension typically a good idea? If so, do we have any room to negotiate?
Thank you in advance for any advice you can provide.
@elliemae I imagine that if they’re wanting to extend you for only 6 months, then they have a plan in place to get a well drilled. You can always ask for a little more, but I think taking the short term extension + extra cash and making it easier for you to get your minerals developed for royalties sounds like a good way to go.
2 Likes
The original lease payment was for the paid up three years, so that is why the new extension payment is less as the time frame is less.
1 Like
In addition to negotiating the bonus, you should also ask for a royalty of 25% (if yours is currently less) and adding a no cost provision plus a good Pugh/Retained Acreage Clause coupled with a strong continuous development provision. I have agreed to extensions several times but always used the opportunity to try and amend the lease. You may not get everything you want but it is worth trying. You can leverage your position by mentioning the fact that you have other companies interested in leasing.
3 Likes