I purchased land recently that already had a mineral lease contract on it for 20 years with an additional 20 year option after that. Is this contract still in force for the new owner (me) or can I sign a new mineral lease with a different company?
did you get the mineral interest with the surface ?
harry said:
did you get the mineral interest with the surface ?
Yes
Thanks. That was one of those unnecessary clarifications. When you asked if you could lease it again, someone could have assumed that you also acquired the minerals. It would be a very costly and even a higher risk business if a mineral lease would expire prior to the agreed upon primary term, in a valid lease or contract, merely because the lessor happened to sell the land prior to the end of the primary term.
Paul Dill said:
harry said:did you get the mineral interest with the surface ?
Yes
Paul,
If the seller provided title insurance and/or a title commitment, your rights and obligations concerning the lease may be explained in detail by that commitment. Title insurance companies rarely insure mineral rights but do make buyers aware of mineral ownership and leases of record at the time of the title search through their exceptions. Take your deed and title commitment to a local real estate attorney and you will know for certatin what your rights may be.
Assuming that the lease is valid as to your interest, and I suspect it is, you should notify the lessee/oil company of your ownership. Under a typical oil and gas lease, the lessee/oil company is not obligated to pay the new owner until the new owner notifies them of the transfer of ownership.
It would be interesting to see the lease. You never said that it was an oil & gas lease.
It doesn't sound like there is any question that you are aware of a 20 + 20 term lease.
Oil & gas leases don't usually have that long of a term.
I have never heard of an Oil and Gas lease with 20 years either as a Primary Term or an Extension, that is wild. Generally speaking, yes, it would still be in force for the new owner. You could sign a new mineral lease with a different company, but good luck finding one to do so unless you are getting real close to the end of the 20 year term, there is no production, and it is a very competitive area for drilling.
there's no way that OGL is for 20 years, leases in the 1920s on totally undeveloped land were only for ten years.
That would be my experience too, Jordan, but without seeing a copy of the Lease don't we have to go with the information presented to us here?