Beware ROFR Clause In Drake and Vanna II Leases

My family and some of our neighbors have been receiving lease offers from Vanna II and Drake Exploration in Anderson County, and based off my research on here, these Entities are leasing for Expand Energy. PLEASE BE CAREFUL of the Right of First Refusal Clause in these leases regarding mineral sales, the one’s I’ve seen read as follows: “The Lease further grants to Lessee a preferential right of first refusal for any offers to top lease or purchase underlying oil, gas, and mineral interests.”

I’ll never sell my minerals, but I feel sorry for the people that might like to one day as this ROFR kills ALL pricing competition. Expand knows EXACTLY what they’re doing with this ROFR because most early mineral offers/top lease offers are low. If a mineral owner under these leases ever decides to sell or top lease, Expand will have the option to take it without letting you negotiate the price or terms!!

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Drake is leasing for Expand, but Vanna is leasing for Mitsui. These two companies are currently competing for acreage in Anderson County. As of a few days ago, lease offers had reached $1,250/NMA bonus with 25% cost-free royalty.

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Yes, and from what I am hearing all the companies are going to be exercising these ROFR.

They cannot demand to purchase the minerals. ROFR means that if the mineral owner wants to sell and negotiates a price, then he must reveal the offer to the oil company lessee and allow them to match it and buy instead. Majority of mineral buyers will not bother to negotiate if the deal can be usurped by the lessee. No one should sign a lease with this provision. This is just another example of why it is so important to understand all the legal implications of any lease (contract) that you sign. Leases can last decades and you do not get to renegotiate the terms.

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