I just received a lease offer from Lowry Land Co. for Section 15-17N-04W on behalf of Stephens Energy Group. They're offering for my 10.000000 net mineral acres $450 per net mineral acre, 1/8th royalty and 3 year term with 2 year renewal option at $450 or $350 per net mineral acre, 3/16ths royalty 3 year term with a 2 year renewal at $350. I have to be honest that ever since I inherited the mineral rights, I haven't done the research I need to do. 1) Do I have to lease? 2) should I lease? I've read so many articles that say don't lease and some that say to lease. All I'm trying to accomplish with these rights (I have others besides the Section above) and want to be able to get some type of consistent payment and leave something to my kids. I've been getting about $120-$150 every few months for a couple years now, so not a lot. Can someone help or tell me who I should contact for help? I appreciate any advice.
Paulee, You don't have to lease, but you need to have a good lease that you completely understand if you plan on leasing. If you haven't leased when Stephens needs to drill, you will be forced pooled. 1/8th royalty and the renewal option is not a good offer. I never sign a lease with a renewal option and try to get 1/4th royalty.
I really appreciate your feedback. I have 2 questions, do I have to reply to them in the letter they sent to me and can you please explain forced pool to me. I've seen that a lot but don't really understand. Again, your feedback is much appreciated.
If you want to lease you need to reply and start negotiating your lease cash bonus amount and lease clauses, royalty percentage and lease term, but if you don't want to lease, you can wait until you receive a forced pooling notice and then you will need to make an election like 1, 2 or 3 below:
1. participate and become a working interest owner. This means you, the mineral owner, will be charged with your proportionate share of the well costs before receiving any monies from production; (the well costs will be set forth in the forced pooling you receive)
2. take one of the fair market equivalents (typically a cash bonus plus 1/8th, 3/16 or 1/5 royalty); or
3. take a “no cash” 1/4 royalty option (sometimes no cash, 1/4 royalty is not an election)
Note: operators are required to make value checks of leases taken in all the sections surrounding your section to determine fair forced pooling offers. However, you can run the risk of not receiving anything if the operator never decides to drill and file with the OCC to be allowed a force pooling.
Once you make your forced pooling election you should mail it certified with a return receipt to (the forced pooling notice will instruct you where to mail your election). Also, keep a copy and mail a copy certified with return receipt to the Oklahoma Corporation Commission. http://www.occ.state.ok.us/
You may want to get an attorney to make sure you have clear title to your minerals and help you design a good lease or navigate the forced pooling process. You can also check back with this forum for leasing information, attorneys etc.
Here's some info on forced pooling and lease clauses.
Just got an offer in sec 16-17n-4w for 150 bonus and 3/16 from an outfit called Raymond. Waiting for pooliing unless a lot better offers come along.
Sometimes, land services front run leases then turn the leases for a profit. Make sure you are dealing with the company who will drill the well. The landman should tell you if he is working for a independent land service or a land service that is working for the operator who will actually drill the well. Also, as the price of oil goes up, so will the value of the lease offers. The company that plans on drilling will try to get as many leases as possible while the price of oil is low. That's why they are trying to get 2 year options to renew the lease. They know that the closer it gets to the time they need to drill, the more they will have to pay for leases. That's why many mineral owners wait until they are forced pooled.