We have received an offer to top lease on land out of production for over 4 years that has never been released by the former company, Sandridge. We are not familiar with top leasing at all. A company out of Edmond, OK has sent a lease with recitals. Evidently they will handle getting the release on the minerals and then market the lease to a third-party purchaser. They also want some reimbursement for marketing the royalties. Is this standard for a top-lease? It makes me nervous to sign the lease agreement to them without any idea of how much we would receive per acre or how much we might wind up paying to get the lease marketed. The terms of the lease seem to be in order otherwise. We do want to get the minerals released and have no idea how expensive that might be. Is this offer standard for a top-lease or is it out of line?
If there has been no production at all for four years, your lease is probably expired by itself according to the terms of the lease. You can ask Sandridge for a release of lease.
Release of lease oklahoma686.pdf (7.1 KB)
Most top lease companies pay you, not the other way around.
I am attaching an article on the difficulties with top leases. I choose not to do them.
An Overview of Recurring and Related Issues Involving Top Leasing.pdf (210.2 KB)
Cheryl,
If the lease has been out of production for 4 years then its safe to assume the lease has expired on its own terms. A “release of lease” isn’t required unless the original lease contains a provision saying so. Normally these things are cured by filing a non-production affidavit, should another entity lease and drill on your lands. It sounds like the company in question is bulk mailing letters hoping to get a bunch of free options.