I could really is some help understanding lease contract and making sure amounts are fair. Thank you in advance
Tamara, if you have a considerable number of acres you will want an attorney. If not then here is a list of things I borrowed from a couple of posts made by M Barnes:
Always ask for 1/5th and 1/4 royalty options. Do not accept the lease terms they offer without understanding them. Most likely you will need to change several clauses.
You can try for Favored Nation Clause, but they are very hard to confirm with actual data. Some folks do put one in their lease that if the pooling numbers are higher than the lease, they get the pooling amounts (those are public).
Yes, you need both Pugh clauses.
You need a depth clause,
You need a no post production charges clause (I do not do the enhanced value clauses for a variety of reasons) Tax are required to be taken out.
The shut in clause can be limited in time. Two years should be the maximum. Most companies will not strike it. ( Note from Don Bray: You can negotiate the amount. $1 acre per year seems to be standard... I have seen one lease for $20 acre per year.)
You need a Commencement of Drilling clause.
Do not warrant title, no two year exemption.
Never do the two year option.
447-00RoyaltyOwnersGuidetotheOCC10413.pdf (1.41 MB)Thank you so much for the info!