I have an offer from redSky to lease on Section 10-01S-01E for$900 per NMA with 3/16 and 5 yr term or $750 per NMA with 1/5 and 5 yr term or $650 per NMA with 3/16 and 3yr term or $500 per NMA with 1/5 and a 3 yr term. I have the same offer from RedSky for Section 07-01S-01E. Does anyone have any knowledge about those sections and or offers?
Stephen: I own some minerals a little further south and am getting the same kind of offers. This area is getting a little more attention now that the northern SCOOP is about leased &/or drilled up. In my opinion, for what that is worth, prices will continue to rise in the next year or two. Probably won’t be long until we see several hundred dollars/acre & 1/4th royalty.
Todd M. Baker
Ask who they are leasing for (probably Continental). Personally, I never lease for more than three years and frequently for less. Be very careful about the draft lease they put in front of you. I have had quite a few Red Sky leases that need serious negotiation.
Stephen you can call the company and try to negotiate a better % 1/4 especially if you do not take the bonus.
Thanks for your reply. What should I look for as negotiating points and should I draw up my own lease agreement?
Unless you have a whole lot of acres, you probably won’t get 1/4h at this stage in the game-although I always ask. May be zero bonus which is fine.
If you are a novice, then you need a good oil and gas attorney to draw up a lease for you if you want your own. You can get in a whole lot of trouble doing it yourself because every one of those words is important.
What many of us do is take the base lease they offer and mark out the clauses we don’t want. We then add an addendum with the clauses that we do want. Again, with an attorney to help.
CLR is not usually very easy to negotiate with. As time goes on and they get closer to actually drilling, third party groups may come in. I find that they can be easier to work with in some cases. The things you want to watch out for are post production charges (you don’t want any), no free use of oil or gas, no warranty of title, no top lease clause, no lease extension, a limit on the shut in time frame, a depth clause, a commencement of drilling clause, a Pugh clause-just to name a few. (Not giving legal advice-just information). The Mineral Help tab above is a good resource. There are several attorneys listed in the directory.
Stephen, We just the same offer—this is what the letter said: Red sky respectfully request that you consider the following offers to lease (Section02-01S-02W approximately 3.3332 net acres) Or assign your interest to Continental.
Option 1 — lease or assign your interest for $900 per net acre with a 3/16th royalty and a five year term Option 2 — lease or assign your interest for $750 per net acre with a 1/5th royalty and a five year term Option 3 — lease or assign your interest for $650 per net acre with a 3/16th royalty and a three year term with two year to extend the lease Option 4 — lease or assign your interest for $500 per net acre with a 1/5th royalty and a three year term with two year to extend the lease
What are you considering?
John Gibson
I just had approved no bonus and 1/4 royalty. Janice
Make sure you do not have any post production costs, a depth clause, commencement of drilling clause, no top lease clause, no warranty clause, no option to extend to name a few of the possible changes you need to make.
If you wait, you will do better than $0.00 & 1/4th. Many of us will pay $$ with 1/4th royalty when drilling is more certain.