Need some information on a lease if ABC offers 500.00 an acre and a 20% royalty with a 2-year option. And they don’t drill but still want to re-lease what happens? Does new paperwork get filled out? Or if they drill a well in the first 3 years and want to drill somewhere else on same land does a new lease get drawn up and do you still get the 20%?
I recommend Buddy Cotten’s blog “3 Year Plus 2 Year Kicker Lease.”
How would you feel at the end of the 3 year primary term, companies were then paying a bonus of $5,000 per acre or more and they only pay you the $400? It would not feel good, would it? It has happened more often than not in the shale plays all over the country.
Remember, the 2 year option is not a guarantee that they are going to “have” to pay you. It is their option, not yours!
Native America:
I have to agree with Mr. Stewart and I never agree to any extension due to this fact. There are examples of this in ND where minerals were being leased in 2008/2009 for $100/acre and today these same areas are going for $1500/2000 per acre.
Appreciate your input. Only going to sign a 3 yr lease.
The shorter the lease the better with no option “kicker”. Now is it possible? Depends on how badly they want your land or how badly you want a lease. And remember, deliver the signed lease when you have cash “in hand”. Good luck.