I was recently approached by Drake regarding a lease for mineral rights I inherited and this is my first time dealing with this. At what point would you recommend getting a law firm involved to look over things? I feel with the amount I own it might not be financially beneficial for me to get a firm involved but at the same time I don’t want to be taken advantage of.
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It depends upon a lot of things. The location within the County, Survey and Abstract number, the number of Net. Mineral Acres you own. A law firm that deals with oil and gas leasing a lot. No local law firms in Houston County are qualified. In a lot of cases you might can not afford to not use a good law firm. Good Luck
You can get quite a bit done at the start. Make them define the royalty percentage, bonus amount per acre, and the term of the OGL. Let them know you want them to provide an OGL that include a horizontal and vertical Pugh clause as well as a no cost royalty clause. Tell them to strike the warranty provision. Finally let them know you will most likely provide a copy of the OGL to your attorney for final review. You want them to prepare the OGL since that will save you time in negotiation. It is easier for an attorney to review a document then produce one from scratch.
With all that said, you are not a professional and will not know if these changes they present are favorable to your interest. Get a review by a professional you can trust. Good luck
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If a mineral owner is approached about leasing it is a good idea to ask the Name of the landman, his broker’s name, the company name, their phone #'s both office & cell, their email addresses and the brokers mailing address & request that they send you a copy by email of the proposed lease terms.
What did Drake offer? Still low balling?
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Three-year Lease, with Three-year option to extend 18.75% Royalty Bonus Payment of $350.00 per Net Mineral Acre
Drake made me the same verbal offer just today. I’m still waiting on the survey and abstract number, and also waiting on a written offer before sending it to my attorney (I’m very fortunate to have an oil and gas attorney in the family) I’ll share what I learn.
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I got the same offer from Drake yesterday. From what I am told they have a large buy area. I am not sure the offers will get much better until their is competition arrives or they get to drilling and are forced to pay more. Do we know the company for whom Drake is buying?
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Drake recently offered one big mineral owner $500 per acre bonus North of Latexo. Then offered the next door neighbor $200 per acre bonus.
Drake is leasing for Chesapeake Exploration LLC. AKA Expand
Tell them in the future that if they come back with a better offer that the lease will have to be dated the day they originally made you the low ball offer! 
I reviewed the standard lease that is being proposed by Drake. The thing is a cesspool. Two clauses that caught my eye immediately are Paragraph 12 and 13.
Paragraph 12 is the same clause that several operators started using years ago regarding preferential right to purchase in the event of a top lease. It has always been a problem that had to be eliminated.
Paragraph 13 is one that I haven’t seen before. It extends the “preferential right to purchase” in the event the mineral owner receives an offer to purchase their retained rights. It is unconscionable that this should be included in a lease form without disclosure, particularly when a memorandum is being filed and this provision is not public record. If you think about this it could cause a huge amount of problems down the road. Does this create a problem when familys execute mineral deeds for estate management purposes? What if the mineral owner sells to a third party and the spends the money before this onerous language is discovered? Will the preferential right of Drake, or their Assignees, depress the price of the offers the mineral owners receive?
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The clause is disclosed because it is in the OGL. The Memo and the OGL are executed at the same time. Too many execute an OGL thinking it is “Standard Terms” because they want the money and do not want to pay for professional help. Most Lessee’s will not balk at striking the provisions with the most modest challenge.
Lessor’s need to understand this is a negotiation with a professional that is well prepared and wants to achieve the best terms for the company. Time is in the Lessor’s favor, so use that advantage well.
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