I need help making decisions about continuing a current lease that is due to expire in May. I have been asked to make a decision about signing an additional lease prior to the May expiration at a 3/16th royalty at a price that is 60% less than the existing lease price per mineral acre. It seems to me that doing it in advance takes away the risk of competition but I could be looking at this incorrectly. When this lease was originally signed, I had two companies competing for the lease. I ultimately signed with both companies as one covered another area. There was a significant difference in the amount I was offered after the two companies were aware that there were competing interests. Not clear whether I should contact the other leasing company or if the reduction in price is to be expected. The company the broker is representing is Continental Oil. The property is NE/4 NE/4 SE/4 and SE/4 NE/4 SE/4 of Section 15, Township 38, Range 4W, Stephens County, Oklahoma. Any advice on decisions about the lease offer will be appreciated.
Personally, I let the lease expire unless there is an option to extend (which I never do) which forces my hand. I also ask for a 1/5th or 1/4 option. Lease bonus amounts are much lower this year. I am more interested in a long term higher royalty and a well crafted lease for the mineral owner’s benefit. I have no problem being pooled, actually prefer it in some cases. What is the Township? There is no 38 in OK. As drilling gets closer, you may have other offers which are better (or worse) than the current one. I never sign the first draft of a lease from a company as most of them need quite a bit of negotiation. Might be a good time to get a good oil and gas attorney to look at your current lease and suggest improvements.
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