I hear ya! This lease will be in force long after I am gone so getting quality legal advice is important. I was just curious about the language. One word can change the entire meaning and the addendum’s are a true nightmare! One needs to get educated but also seek legal help. I appreciate everyone who posts here. Knowledge is priceless THANKS
We were offered $100 an acre to lease 1/5 royalty and $400 an acre to sell. We refused. We felt divided three ways was not worth tying it up. It hadn’t been messed in 14 years. We countered with $500 an acre to lease and ¼ royalty plus a long list of other things we were advised to ask for. They replied saying they didn’t feel it was worth that to them and wished us good luck.
Maybe a month later, we got a call and they agreed to all terms but requested a 5 year lease rather than 3. We all agreed to those terms. As we were reviewing final paper work, we got another call with a $100 an acre offer. We told this company we were offered $500 already. They matched it but only wanted 40 acres. The first company wanted all 640 acres.
Then last week a third company contacted us with an offer to purchase for $1000 an acre.
No activity on this for 14 years and - boom!! Three offers in two months. Wish I knew what was going on in Terry County Texas.
Btw… ChatGpt can certainly help you with a counter offer. Then get an attorney to look over what you verbally agree on.
What is your take on a scenario where the last couple of leases yielded no drilling/development whatsoever? A current offer shows up. Do you push for higher bonus based on this historical outcome? Is there any way to gauge intent to drill prior to signing a lease?
That is some true property management nuance @TKLand. I would look at the company in detail. Time and research are your friend. I have a practice that each of our properties gets an annual review. That review is not based on activity, producing or not producing. We have many properties covering several States, so I have a great deal of this automated for the review process.
Obviously I also perform a detailed review when considering any proposals and that annual review provides greater depth. When dealing with a magician, watch the hand he is not showing you. Our practice is we require brokers to disclose their principals prior to any OGL. That alone will help you with intent. I have known many people that have done very well by leasing a property for bonus multiple times, so I cannot say that is a poor practice.
Today financial requirement results are tantamount for a company to raise development capital, so OGL plays are much less common. This does not mean that if you are leased that there will be development, but that is more common today. Remember time and research are your best friends.
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