I am in receipt of an Oil, Gas and Mineral Lease from Diamondback O&G, negotiated through Clay Johnson Oil & Gas Properties. Are these standard leases and is there anything I should look for in the lease that should not be included? I don't know how to make sure that this isn't a scam. Thanks for your advise.
I would recommend that before signing any O&G lease, you contact an experienced lawyer to make sure that everything is addressed as to your favor. Examples of this area a "cost free" lease (no charges / deductions from your share of the royalty payment for transportation, processing, etc.) and Pugh clauses (rights below and sometimes shallower than producing zones are dropped from lease and not held HBP after primary term). Plus lots of other info and details.
Very good chance that this is a legit lease but you will initially be offered the most beneficial lease for Diamondback - not for you.
What is the bonus? Term? Royalty offered? All issues where you may be getting low balled.
Unfortunately, I do not know anyone knowledgeable of mineral rights, let alone an attorney I negotiated the bonus and the lease is for 3 years and 1/4 royalty. They have also sent me a W-9 to complete. Is that standard? I'm not happy giving out my social security number to a company that I do not know. One final concern, If I sign the lease and return it to them, what guarantee do I have that I will get a check, because the check is not going to be cut until they receive my signed lease.
Again, thanks to everyone for providing any information that will help.
Diamondback is a well known public company with a great reputation. I don't know this broker group, however.
Does your lease have language that makes it a cost free lease as to the issues I earlier mentioned? From personal experience, having these costs not excluded from a lease can end up having 10 to 15% or more of your royalty payment deducted each month (I was not involved in the negotiation for my situation). And is there a Pugh clause in your lease? If not, ALL your mineral rights will be held by production even if they are thousands of feet below the producing horizon.
It is your decision as to whether to sign the lease and return it - or sit on it and do some research / chase down an O&G attorney (where are you located?).
By the way, as I understand it, if you sign the lease and you are not paid, the lease is voided (there should be wording in the lease to address this issue - another point to consider).
Has the broker for Clay Johnson O&G given you a contact at Diamondback?
Last point - for tax reasons, you will eventually have to give you SSN to whoever leases your minerals so that they can send appropriate paperwork to IRS / government.
OK - one last suggestion: set up another posting asking for contact info for O&G attorney in your area (or any other area)
Thank you, Rock Man.
Does anyone have any suggestions for an O&G attorney? I live in Florida but my mineral rights are in Texas.
Diamondback is a reputable company. Depending on the size of your holdings, if they are large, I would have an oil and gas attorney negotiate the lease for you.