We just received a letter from Bearcat Land with a lease offer for our interest in 18-10N-10W Caddo County, Standard offer of 1/5 or 3/16 and bonus, but language I haven’t seen before.
Option 1: A lease term of 3 years, a 1/5 royalty, and a lease bonus of $802 per net acre with a 2-year option at $802 per net mineral acre, or
same language with 3/16 and $1,252 bonus.
Does anyone have any information on this tract, Bearcat Land, who is looking to drill, etc? I obviously want to see the lease offer, but at 2.5 acres, I can’t justify attorney fees, and don’t want to battle for favored nation, transportation costs, etc. Would I be better off waiting to be pooled? M. Barnes? Any help appreciated. WSD
Bearcat frequently leases for Continental. Summit Land and Continental have already filed leases in 18 in the last 12 months. Continental has quite a few leases in that township. There are others filing as well, so you might get more offers. You really do not want post production charges which most draft leases have these days. Those clauses can be struck, but not all agents will go for it. Duncan has a rig going in 10N-11W on the west. Mach has a rig going in 10M-9W to the east, so various players in the area.
Personally, I never allow an option for additional years. Puts too much control in their hands instead of market conditions at the end of the three years.
If I cannot get an acceptable fair lease, then I wait for pooling. Duncan has the nearest poolings at the moment, but Continental has a whole big set in 9N-10W to the south.
Martha, I never thought to ask you if you are related to Roger, Kathy, etc., from Corpus. Anyway, if they are sending offers indicative of a force pooling order, shouldn’t WSD go find the FPO at the OCC which would likely be on file since they are sending offers? Or do you suspect it is just a form letter sent out trying to sew up acreage? I am in the middle of a thousand things at the moment so my head just isn’t in it right this second. Lots of brokers playing over there right now due to several company acquisitions.
If the mineral owner has their name and address and description of acreage properly filed with the county clerk recorder of records, then they should get notices of pooling and the orders mailed to them (if they are not already leased.) One can look up old orders on the OCC. The “courtesy” letters come out a few weeks ahead trying to wrap up leasing before the hearing.
Is there any advantage in entering into an agreement to lease our mineral rights in property we know Continental is trying to pool? Specific property in Sections 22 and 23, Township 9 North, Range 10 West, Caddo County, Oklahoma.
Depending upon the timing of the pooling, you may not have time to lease. Pooling has its own advantages. Continental has a rig to your east and a permit to your west.
As Martha indicated timing is everything. On one hand, if you work on a lease with a company you have the ability to negotiate more favorable lease terms depending on your mineral interest size and gross acreage. You can find more recent force pooling orders to get an idea of what might be offered to opt in. Also in those orders you will find defined what happens if they force pool the acreage and do not get an opt-in type of agreement. As many of us typically say, higher royalty is usually more advantageous to your pocketbook in the long run, which means foregoing or reducing bonus payment. I am speculating here but would anticipate you hold a smaller Net mineral acre share in a tract being unfamiliar with the process, but that is ok, it is a process to learn the nuances of this business. Educate yourself, do some digging and try and negotiate the best deal you can up front and make sure to seek legal advice due to most landmen will not explain the clauses and their implications to you. I would also say it might be worth talking to a well-versed CPA regarding the tax implications of both sides. But with that said, if you can negotiate a more favorable OGL than the terms you typically see on recent FPOs then I would say go for it. You will likely be dealing with a broker that is working for an operator or will be turning leases to them. Remember, when you add another layer of folks wanting to be paid for services it will further dissolve the interest of the operator and it is a chess match. They will either be paid or carve out a piece of the pie as an override which could leave some meat on the bone in an OGL as far as royalty is concerned. This conversation gets real deep real fast…