Is such a bad idea for the landowner, it borders on insanity. Let me give you an example,
Our poor unrepresented Lessor agrees to lease his land for $500 per acre today (going rate) for three years with the Lessee having the option to extend the lease at the end of the primary term for an extension payment of $4000.00 for the last two years. Sounds wonderful, right?
Well, the landowner is in a no-win situation. If at the end of the primary term the "going rate" is higher, the Lessee exercises their option and can either flip your lease for a profit (if they lost interest in the acreage) or have it at a discounted price compared to current lease rates.
If the Lessee is not interested and the "going rate" is lower, they do not extend the lease.
If the company is interested, but the going rate is $300.00 per acre, they simply do not extend the lease. They may either be upfront (which will be dumb for them to be) and tell you that they are not going to extend at the $4000.00 per acre, but will lease at $300.00 per acre for the last two years. OR, more likely they will not extend the lease, but send in a new landman to buy in another name a new lease at the then current rate of $300.00 for a three year lease.
The landowner loses - again. How does the landowner win?
The landowner negotiates a first right of refusal with the oil company, which by its very nature creates competition. If he is not entirely confident in his actions, he gets some representation and contacts someone who knows what they are doing and let them assist.