Does anyone know if it's customary for a company to offer less bonus per acre when they're asking to renew an expiring lease? This is in Atoka County, Oklahoma.
It all depends on the market conditions in your particular area. For example, some folks received a $1,000/acre bonus in Fort Worth when they signed a lease in 2007, others received a $20,000/acre bonus when they signed a lease in 2008. Both of those people may be offered a $2,000/acre signing bonus to sign a new lease in 2012 if their original leases expired, so a bonus offer can certainly either be higher or lower the 2nd time around. Unfortunately I can't help with prevailing lease terms in your county....
If I were offered less royalty I would think wow they are really hurting. I would offer to help them with a lease for $0 bonus and 33% royalty, so they could save even more on startup costs.
RW,
I like your offer. Yep, sounds like the company needs help.
Clint Liles
Wow if I signed for a $0 bonus I would get a 2 year lease maximum so they don't tie up your rights for nothing in return. Personally I would never sign for a $0 bonus.
I'd be willing to give a 99 year lease, if there is anything there, when they take it out I would get 1/3 of it. The longer the lease the better because I would hate for my lease to run out the year before they drill. If the lease bonuses amount to 1% to 2% of what they expect to get out of the ground, how many years of lease bonuses do you think you would have to collect so that my 1/3 would not be greater? Of course almost all of my minerals have been drilled on and all my wells will be successful short of mechanical failure on my proven acres and if the well fails, they will drill another. It's not something you would have to worry about anyway, the lessee isn't going to accept a lease for 1/3 if they can possibly help it, they are in business to buy all your rights for 1% to 2% of what they think the value is plus a promise of a smaller percentage of the value of the production. They would rather triple the bonus and have you take less royalty because as they say, the money is in the ground. As a PS; I am not a wealthy man except in spirit. I don't want the operator to pay me for (possibly) nothing. I would much rather have and settle for a decent share of what is there that is mine. I don't want to sell 80% of what I own for 1% to 2%. I will take the risk alongside the operator that there is nothing there. What could be more fair than that?
Jon S. said:
Wow if I signed for a $0 bonus I would get a 2 year lease maximum so they don't tie up your rights for nothing in return. Personally I would never sign for a $0 bonus.
Wow, I was really tired, I meant to say bonus instead of royalty. Thanks for understanding my meaning.
r w kennedy said:
If I were offered less royalty I would think wow they are really hurting. I would offer to help them with a lease for $0 bonus and 33% royalty, so they could save even more on startup costs.
I would not take Mr. Kennedy's advice at all - see a good oil/gas attorney - if you followed his advice, you would lease for $0 - and they might NEVER drill and you would NEVER get a dime - I think this guy is a quack and should be slapped out of this forum. You make money from leasing bonuses and if your property is leased for two years at $500 an acre and they don't drill and then come back, you get leasing bonus money all over again. This is not a bad cycle to be in - please contact a good oil/gas attorney who knows how to negotiate leases.
Susan Nolan,
I assure you RW Kennedy is not a quack. Mr. Kennedy is a very intelligent business man. I agree with him on the $0 bonus money and 33% royalty statement. I have 342 acres that I would lease that way in a heartbeat.
My opinion is you are out of line with your statement about Mr Kennedy. Shame on you.
Clint Liles
Thank you for your opinion Ms. Nolen. I didn't ask what kind of person you are, but it is interesing that you think people who you disagree with you should be "slapped out of this forum". I guess I now know what kind of person you are. I hope you feel better soon.
Susan Nolen said:
I would not take Mr. Kennedy's advice at all - see a good oil/gas attorney - if you followed his advice, you would lease for $0 - and they might NEVER drill and you would NEVER get a dime - I think this guy is a quack and should be slapped out of this forum. You make money from leasing bonuses and if your property is leased for two years at $500 an acre and they don't drill and then come back, you get leasing bonus money all over again. This is not a bad cycle to be in - please contact a good oil/gas attorney who knows how to negotiate leases.