I have 34 acres in Jefferson township in Noble county Ohio.It was leased to Oxford oil at $10.00 per acre per year and 12.5% royalties on a 5 year lease it expires next November. Eclipse resources has bought them out and want to amend my lease they have offered $1000.00 per acre per year with 12.5% royalties for and make it a 10 year lease. Land around me without leases are going for 5000.00-7000.00 per acre per year. Should I wait the year? Or do I have enough bargaining power to get my numbers up.Any help is appreciated.
You have enough power to go ask them. If land around you is so much more they must expect people to be aware of that. But don’t look at just bonus, up your royalty too. That is long term income. Start with 20% and see where it goes. Also talk to neighbors and present a unified front - it’s like owning more acreage if everyone works together. Good luck.
If you accepted $10/acre, you probably signed a very bad lease. Amending a bad lease just exacerbates or builds on a bad situation like patching a worn out suit. If your minerals are that valuable, you should get a copy of a current lease and find out why the new lease can demand that kind of cash. Once you have an understanding seek help form a MINERAL lawyer to make sure you aren't going from the frying pan into the fire by signing an amended lease. Safest procedure for you is to negotiate a new lease that suits you and exchange it for a termination of the old one. The new operator will be happy to do so. If not, there must be others driving the prices up. As Rick Tatum states, focus on the long term income. That, and the banks is where the money is.
The $10.00 per acre was high here 5 years ago. About two years ago they started drilling into the Utica shale and prices have skyrocketed since. I got a mineral lawyer firm looking into it and gave them some of my requirements. (1) to bring the bonus up to $4000.00 (2) A commencement to drill in at least 3 years (3) If they don't drill in three years The bonus goes up another $1000.00 and (4) I want my royalties closer to 20%. I think I'm being reasonable I've done a lot of research to learn as much as I can. I'm just concerned if I wait I could lose out. Thanks for the replies.
Be ready to wait the year. To quote my brother who knows almost nothing of oil and gas but is a pretty good observer of life, "if it's worth anything, it's worth more than $10.00 an acre". I agree that unseen, the present lease is probably bad. Get help with your next lease, competent help will actually make you money in your situation. The is more involved than just the obvious bonus/royalty, there is the small print that can take most of it back on the backside.
Gary have you ever heard of a company Grandfathering a lease?
Gary L. Hutchinson said:
If you accepted $10/acre, you probably signed a very bad lease. Amending a bad lease just exacerbates or builds on a bad situation like patching a worn out suit. If your minerals are that valuable, you should get a copy of a current lease and find out why the new lease can demand that kind of cash. Once you have an understanding seek help form a MINERAL lawyer to make sure you aren't going from the frying pan into the fire by signing an amended lease. Safest procedure for you is to negotiate a new lease that suits you and exchange it for a termination of the old one. The new operator will be happy to do so. If not, there must be others driving the prices up. As Rick Tatum states, focus on the long term income. That, and the banks is where the money is.
Gary L Hutchinson
Minerals Management
Darlene,
Thats a new one for me. It could be that you may have a mining lease and production is nearby. For your protection and with the lease rates being thrown around, the investment of $400 with a bona fide mineral attorney could keep you from deep regrets in the future. If you need help finding one in your area, send me a personal message and I will find one for you. Fifteen minutes with your lease will probably be enough for a good attorney to keep you out of a quagmire or grief. November is less than 4 months away and you seem to be in the driver's seat.
Gary H.
Darlene Nelson said:
Gary have you ever heard of a company Grandfathering a lease?
Gary L. Hutchinson said:
If you accepted $10/acre, you probably signed a very bad lease. Amending a bad lease just exacerbates or builds on a bad situation like patching a worn out suit. If your minerals are that valuable, you should get a copy of a current lease and find out why the new lease can demand that kind of cash. Once you have an understanding seek help form a MINERAL lawyer to make sure you aren't going from the frying pan into the fire by signing an amended lease. Safest procedure for you is to negotiate a new lease that suits you and exchange it for a termination of the old one. The new operator will be happy to do so. If not, there must be others driving the prices up. As Rick Tatum states, focus on the long term income. That, and the banks is where the money is.