Can a company outbid the company that leased my mineral rights?

Regulation
1

I have a lease from Company #1 Now have an offer to lease from Company #2.

My current lease states under provision 18. "If during the term of this lease Lessor receives a bona fide offer from any party to purchase a new lease covering all or any part of the lands or substances covered hereby, and if Lessor is willing to accept such offer, then Lessor shall promptly notify Lessee in writing of the name and address of the offeror and of all terms ....." Then it goes on to say ".... Lessee has preferential right to purchase a new lease from Lesssor in accordance with the terms and conditions of the offer, ...."

The last portion of 18 states in part: ".....as long as this lease remains in effect any new lease from Lessor shall be subordinate to this lease and shall not be construed as replacing or adding to Lessee's obligations hereunder."

I have been offered a significant increase in both bonus money and royalty, and would like to consider this as mentioned in above quote, however, I am not certain I have interpreted it correctly. Have you ever heard of one company over bidding (?) another company who is holding the current lease?

Thank you for any enlightenment you can offer. Lee

2

Lee, I believe that clause is in reference to a top lease. If someone is trying to toplease you, I’d follow the directions in your agreement and allow your current operator opportunity to match the terms. If your operator won’t match the terms and you are not held by production, you can toplease, or wait for the current lease to expire and lease again as a totally free agent.

3

Dear Mr. English, I sure wish I could help you, however, i would run to the nearest O&G attorney. I hope it all works out for your benefit. Lee

4

Yes, this is called "top leasing," in which a company makes you an offer to sign a NEW lease before the current one expires. According to your lease wording above, you are required to notify whoever owns your lease of any such offer you receive from any competitors of your lease's original Lessee, who has the right to match the offer from the competitor. In other words, you lease to A, B makes you an offer, you are required to notify A, who then can match the offer from B. This type of leasing usually occurs where you have a strong demand, like the Barnett Shale five to seven years ago, or probably the Bakken Shale now.