Hi All.
I have been approached by Griffith Land Services to lease my minerals in Canadian County. I own 5.19 mineral acres in the SW/4 of Section 36, Township 13 North - Range 5 West Canadian County Oklahoma. The offer is $750/net mineral acre with a 3/16 Royalty on a 3 year term with a 2 year option.
Is this a fair offer? Thanks so much for any help you can provide.
steve
Steven,
It looks like Stable Energy is also leasing in here in 2013, so you may have another possibility. This area is just starting to get a new round of leasing, so I would hold tight for a while and see what develops. You do not want the 2 year option at all. This is very likely a low offer compared to what they will be. If you want to nibble a bit, write them back and say no 2 year option and you will wait for a better offer since there are other leasing companies in the area.
Thanks a lot for your advise. I can afford to be patient so I'll sit on it for awhile. I figured it was probably a low offer since they have mailed me Leases to sign in both May and August and have called on several occasions in between. The offer jumped from $600 Bonus in May to $750 in August. Thanks so much for your assistance. Steve
I have been keeping track of offers starting points and ending points and it usually starts a third to half of what they will eventually offer. Not always, but generally. You always have the option of pooling, but that might be a while away since this area is not quite hot enough yet for that. Once the drilling starts, I usually go with the pooling. In a cool area, I drag out the leasing for a while and try to get top dollar. Sometimes you win, sometimes you lose.
When it gets closer, be very careful about the lease terms. The generic lease they send you is not what you want in the end. It is all to their favor and not to yours. A few key clauses are negotiable. Actually all clauses technically, but you really care about a select few.
Thanks again for your response Mr. Barnes. I know we have nothing specific about lease terms to discuss but can you identify the general clauses I need to pay attention to or direct me to guidelines already published? Thanks much, steve
You need a no post production deductions clause, a depth clause, a limit on the shut-in royalty payments to two years cumulative, do not warrant title, a commencement of drilling clause. When you get the generic lease, we can help pinpoint the corrections.
Excellent. It may be a while since I am prepared to wait them out. As always, your help is greatly appreciated. steve