We haven’t had a lease in many years, now a few have come in on our small acreages. What is the deal with all of them insisting on a three year option after the three year primary term? What is the best way to refuse ?
Just say no. I never allow an option on my leases. I also have an attorney review any draft lease because the drafts are rarely in the mineral owner’s favor.
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If you’re motivated by the track record of the group making the offer and the other terms they are proposing, you might avoid making options a flat deal killer by telling tell them you would be willing to consider…a shorter option period, or one that provides for a higher bonus amount on the option than in the original lease, or possibly by saying you would consider doing a lease with a flat 4 or 5 year primary term for a higher bonus amount.
The size mineral interest you own will probably influence how much negotiating leverage you have. If you haven’t already, you might try contacting other sizeable mineral owners in your area to see if they are willing to share information on offers and possibly negotiate as a group if they’ve been approached by the same company.
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