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Can a company outbid the company that leased my mineral rights?

I have a lease from Company #1 Now have an offer to lease from Company #2.

My current lease states under provision 18. "If during the term of this lease Lessor receives a bona fide offer from any party to purchase a new lease covering all or any part of the lands or substances covered hereby, and if Lessor is willing to accept such offer, then Lessor shall promptly notify Lessee in writing of the name and address of the offeror and of all terms ....." Then it goes on to say ".... Lessee has preferential right to purchase a new lease from Lesssor in accordance with the terms and conditions of the offer, ...."

The last portion of 18 states in part: ".....as long as this lease remains in effect any new lease from Lessor shall be subordinate to this lease and shall not be construed as replacing or adding to Lessee's obligations hereunder."

I have been offered a significant increase in both bonus money and royalty, and would like to consider this as mentioned in above quote, however, I am not certain I have interpreted it correctly. Have you ever heard of one company over bidding (?) another company who is holding the current lease?

Thank you for any enlightenment you can offer. Lee

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Permalink Reply by r w kennedy on July 6, 2011 at 5:52pm

Lee, I believe that clause is in reference to a top lease. If someone is trying to toplease you, I'd follow the directions in your agreement and allow your current operator opportunity to match the terms. If your operator won't match the terms and you are not held by production, you can toplease, or wait for the current lease to expire and lease again as a totally free agent.

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Permalink Reply by Seth on October 23, 2011 at 10:30pm

Lee, what is your message if a oil & gas lease occurred in 1941 before 1946 Pugh Clause language, held to 2250' and 185.3 acres of 242 acres are in a 547.71 unitized lease signed in 1964 in Texas. The current operator purchased old lease in 1982 with one well on our property and 3 throughout the unitized and we get pennies of the almost $20,000 or more that one well produces a month and 1/8 old lease royalty language! My question is can a company in this case use it's ability to either persuade or take over current operator with shadow rights (Austin Chalk or chalk well) & held by production to release for more productive Eagle Ford Shale "play" opportunities, etc. or is this one "titantic" sinking opportunity gone by? Major company has leased next door, and in front of us and told us that part of us is within their scale, but we have not seen any lease(s) or bonus, but neighbors have signed and received $1,400 per acre bonus! Have you heard of the outbid for the deeper rights, greater than 2,250 feet while the Eagle Ford Shale is at least 9,000 feet or greater in this same area and the excitement is everywhere around us! Lee, talk to me!

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Permalink Reply by Lee Young on November 6, 2011 at 2:59pm

Dear Mr. English, I sure wish I could help you, however, i would run to the nearest O&G attorney. I hope it all works out for your benefit. Lee

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Permalink Reply by Seth on November 6, 2011 at 4:38pm

Thanks.

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Permalink Reply by Seth on January 26, 2012 at 5:16pm

All,

Last week we sent an alert, urging you to send a letter to the Railroad Commission telling them not to railroad Texans’ property rights via new rules for the Mineral Interest Pooling Act (MIPA) – the law that authorizes forced pooling.

If you haven’t done so, it’s not too late to send a letter.

But even better than sending a letter, come say your piece in person.

WHAT: Railroad Commission hearing to consider whether to proceed with new forced pooling rules under MIPA

WHEN: January 30th at 9:00 am

WHERE: William B. Travis State Office Building, Room 1-111 1701 N. Congress Ave., Austin, TX

WHY: The reason the TRC is considering the rules now? Among other things, they want to legitimize railroading (hah!) small landowners -- who want no part of production/leasing -- into not just drilling, but PAYING for the drilling they don't want. If the well isn't profitable, new rules could wind up losing landowners money.