I was recently contacted concerning Sec 18-13N-12W offering to lease for 3 years at 3/16 with $1000/acre as the offer. Before signing this lease, I wanted to inquire whether this seems reasonable or if I should attempt to negotiate a better offer. Thank you to anyone who has advice to offer.
Barbara,
Your offer is a "minimum offer". Always negotiate. Read and strike out all items you do not want. Strike out the entire Warranty clause.
You are in an area of increasing interest by many oil companies. I would negotiate for several months and see how high the offers go. Every time you receive a higher offer from a different company negotiate a new high. Tell the first company about the new offer (do not give them the first company name, sometimes they know each other) and ask them if they are willing to offer more than the new offer. If not, continue negotiating with the new company.
Another tactic is to email various oil companies and ask if they are interested. Give them your name, contact info and legal description - then wait for their response - usually a landman name and contact info.
If you are notified by the Oklahoma Corporation Commission of a pooling, you can lease up and until the Adjutant Judge rules on your Section. You will receive a relatively fair lease and 3 lease options. (the bonus monies tend to be lower but you can present any written offers you have received) You do not need to hire an attorney to partake in the hearing, but unless you are quite knowledgeable in O&G you'll need one to advise you. Do not be afraid of a Pooling. Your largest revenue stream, over time, will always be the highest Royalty (currently 1/4 which is one of the 3 options).
If you receive a bonus and royalty that you can't refuse, take it and be happy. Always negotiate first.......Always negotiate first.......Always negotiate first.......
Jan,
Thank you for the advice. My first instinct was to negotiate, but there is always the fear that there might not be another chance with the decline in oil prices, etc.
Barbara Reeves