My grandfather and his siblings sold (715.5+/- acres) land in the 1950’s and maintained 50% of the Mineral Rights. As grandchildren and great grandchildren of the original owner we are looking at a lease offer and appreciate any insight. The first offer was in 2010 and covered a 5yr with auto add’l. 5yr lease.
The land is Township 20 North, Range 62 West, 6th P.M.Section 15: SW/4Section 22: S/2NE/4, NE/4SE/4, N/2NW/4, SE/4NW/4, NE/4SW/4Section 23: N/2N/2, SE/4SE/4And all those portions of the SW/4SW/4 of Section 23 and the NW/4NW/4, SE/4SW/4 and W/2SE/4 of Section 26 lying easterly and northerly and below the North Rim Rock of Bear Mountain
The current offer is $50.00 per net mineral acre 5 year paid up lease, providing for 1/8 landowners royalty and an option for extending the lease for an additional 5yrs for an additional $75.00 per mineral acre. There is also a Pugh Clause.
I can provide other information if it helps, I have the lease Oil and Gas Lease.
I am not the individual who posted Jan. 9th asking for help regarding this same area, so if WayneH reads this, Hello from Oregon!
Personally, I would not go for the five year extension as that is too long a time frame. TEN years. I would only go for a three year primary term if possible. You said a 1/8 landowner royalty. Did you really mean that or did you mean the mineral owner royalty. The Pugh Clause is not the only important clause in the lease. Quite a few are important and can hold your family for decades.
Thank you M_Barnes. Yes, it does say 1/8 landowner royalty in the letter from the company, but the contract does not say landowner; there it states Lessor.
Five with a five year extension (ten years) does seem like a long window, but the company offering indicates it is common and generous…
Is navigating this contract something I can learn with research and asking questions on this forum? There are other family members who are relying on my research.
It is always wise to get an oil and gas attorney to look over a lease agreement as it can hold your family for decades! We have one that is over a hundred years old. You can learn a lot on the forum, but for legal work, best to use a professional.
There’s only a few companies in that area, and what they offered is pretty standard. You can probably get a little more royalty. Depending which company made you the offer
Sometimes there is only one company looking to lease and the terms may not be very flexible. However, standard royalty rates are typically at least 15% and 1/6 or 3/16ths can often be negotiated. As far as lease terms, I have typically found that there is a strong correlation between length and lease bonus. If you think it is not likely to get drilled in the next few years, it works to your favor to negotiate a shorter term like 3 years with a 3 year option.