Adjusting Oil/Gas Lease Wording - Time Frame for Response

Recently I was approached with an Intent to Lease document along with a copy of what the lease agreement would be. The per acre amount and the royalty amounts seemed fair, however I did request some changes to the wording in the lease itself, such as:

- Term change from 5 yrs to 3 yrs

- Addt'l detail around how/when royalties would be paid

- Change to verbiage around deductions to royalties which included that royalties would be based - on the higher of the market value or gross proceeds with no dedcutions for post production costs.

- Increase shut-in royalties to $10/acre from $1/acre

- Remove the Lessor to complete title due diligence clause

- Added that a force majeure even could only keep the lease active for a maximum of 6 months after the expiration of the lease term.

- Added wording in the damages section to include additional items, not just the damage to crops phrase that was in there

- Added wording that if the property was to be pooled, that the entire acreage would be included

Since submitting these requests we haven't heard a word, it's been 10 days, prior to that we had continual contact.

Did I ask too much, or is this a typical time frame for response. Also, the landman mentioned that he typically doesn't see oil/gas companies change lease wording, is that true?

Two of my neighbors have already signed with no changes to the lease, the property is in Bennett CO.

Thanks in advance.

I can’t be of much help, other than I know from reading up on this forum that it is very common to have the warranting of title stricken. Which company are you dealing with? One of ours, Upstream, was asking today how much revision we expect to make to the lease, because it will help them decide how much more to bump up the offer. Are you in Arapahoe or Adams County? If Arapahoe, you can go to the Clerk and Recorders website, and lookup leases that have been recorded. Then, you can see what others have been able to do with their leases. They probably all start out the same, since they all seem to use that standard contract, so seeing changes should be pretty obvious.

Thanks Lisa. I’m also dealing with Upstream and I’m in Arapahoe county, been working with a 3rd party however, not Upstream directly, concerned that I don’t seem to be getting any response. I’ll check out the Arapahoe County Website. I appreciate your input.

Just tried the Arapahoe County site, couldn’t seem to find anything, could have been in the wrong section, could you help point me in the right direction? Thx!

On the Clerk and Recorders page, click on records search, and then document legal search. Under the land description, you could enter the legal description for your section, or leave it vague–for instance, under township put 5, and range, put 64. Then, under document type, choose oil and gas lease. I was just comparing myself. GFL & Assoc. has been big in the area, and I saw one that had clearly been negotiated from the standard. It looks like most of the changes are added at the bottom, rather than within the document itself. Let me know if you are still having problems.

Cathy Ugland said:

Thanks Lisa. I’m also dealing with Upstream and I’m in Arapahoe county, been working with a 3rd party however, not Upstream directly, concerned that I don’t seem to be getting any response. I’ll check out the Arapahoe County Website. I appreciate your input.

Just tried the Arapahoe County site, couldn’t seem to find anything, could have been in the wrong section, could you help point me in the right direction? Thx!

Your post is very timely, as I too made similar changes to an oil lease in Montana and since I’ve sent it to the landman, I’ve heard no response. It’s only been 9 days and I’m thinking it’s also part of their negotiating strategy, as there’s an expiration date on the bank draft. Run out the clock so I’ll cave and sign. I’m glad you posted, let us know what happens.

I’ll keep you posted. Thanks for your thoughts.

Bertha Rodda said:

Your post is very timely, as I too made similar changes to an oil lease in Montana and since I’ve sent it to the landman, I’ve heard no response. It’s only been 9 days and I’m thinking it’s also part of their negotiating strategy, as there’s an expiration date on the bank draft. Run out the clock so I’ll cave and sign. I’m glad you posted, let us know what happens.

The landman might say that they have not seen any changes approved, but that is 100% tactical.

We just resolved a lease with Devon in East Texas and from the start of the negotiation process until the time that we had an executed deal it took almost 10 months total.

Glad we waited it all out, however as the ultimate signing bonus was 5x the original offer and the royalty rate moved up from 3/16 to 25%. More importantly, we eventually did come to agreement on many/most of the 5 page contract addendum protections that we were requesting with our lease.

If they do want your minerals, and they DO if you have been approached for a lease, then you definately do have bargaining power to get your requested/required addendum approved.

Good luck

I am an OGM engineer. You did not ask too much at all. Nothing you requested is out of hand. Just be patient.

Thanks for your input, I was wondering about the tactical aspect, your reply confirms that. Have a great day.

David J. Gaar said:

The landman might say that they have not seen any changes approved, but that is 100% tactical.

We just resolved a lease with Devon in East Texas and from the start of the negotiation process until the time that we had an executed deal it took almost 10 months total.

Glad we waited it all out, however as the ultimate signing bonus was 5x the original offer and the royalty rate moved up from 3/16 to 25%. More importantly, we eventually did come to agreement on many/most of the 5 page contract addendum protections that we were requesting with our lease.

If they do want your minerals, and they DO if you have been approached for a lease, then you definately do have bargaining power to get your requested/required addendum approved.

Good luck

Thanks Brad, glad to get your feedback, this has certainly been a learning experience and I’m glad to hear that my requests aren’t out of line. Have a great day.

Brad Brandl said:

I am an OGM engineer. You did not ask too much at all. Nothing you requested is out of hand. Just be patient.

The drafts are worthless. Cold leasing is alot more common than people think. It’s totally optional in my experience, whether they honor and pay the draft. In fact I’ve never had a draft honored yet, and I’ve submitted 3 for payment. RWK

Bertha Rodda said:

Your post is very timely, as I too made similar changes to an oil lease in Montana and since I've sent it to the landman, I've heard no response. It's only been 9 days and I'm thinking it's also part of their negotiating strategy, as there's an expiration date on the bank draft. Run out the clock so I'll cave and sign. I'm glad you posted, let us know what happens.

HELP!!! Need help with a company trying to lease my mineral rights…they are giving me the worst contract around to sign and I would like to present them with one that would be more to my liking. Can I get a copy of the awesome contract from the Devon East Texas with the good Signing bonus and 25% Royalty? That would just make my day! E-mail to lmatundan09@live.com if able. Thanks in advance!

Cathy said:

Thanks for your input, I was wondering about the tactical aspect, your reply confirms that. Have a great day.

David J. Gaar said:
The landman might say that they have not seen any changes approved, but that is 100% tactical.

We just resolved a lease with Devon in East Texas and from the start of the negotiation process until the time that we had an executed deal it took almost 10 months total.

Glad we waited it all out, however as the ultimate signing bonus was 5x the original offer and the royalty rate moved up from 3/16 to 25%. More importantly, we eventually did come to agreement on many/most of the 5 page contract addendum protections that we were requesting with our lease.

If they do want your minerals, and they DO if you have been approached for a lease, then you definately do have bargaining power to get your requested/required addendum approved.

Good luck