Got a lease offer, nervous already

Hello All,

We have a lease offer. it starts like this

In consideration of TEN AND MORE DOLLARS (10.00), paid to lessor, for the royalties provided below, and the agreements of Lessee contained in this lease, all deemed adequate conisderation, Lessor grants, leases....

What is this TEN AND MORE DOLLARS business?.


Reading another post you had done, this is something that R W Kennedy had replied with;

Reply by r w kennedy on March 29, 2011 at 7:37pm
...Standard leases contain words to the effect; (sharpie this out unless you actually have cash in hand) for ten dollars or more cash in hand, the recipt of which is hereby aknowleged. They expect you to lie, to say you have been paid, when you haven't yet been paid. I can tell you it is not just a formality. They are preparing an arguement for court. Ask yourself, why would they be doing that?

They want you to agree that if they never pay you the signing bonus, that the promise of future royalty, and or the very fact that they agreed to lease from you, is adequate compensation. They never have to pay the bonus because [ All deemed adequate consideration ]. I don't think you want to execute that and let it out of your hands. You need alot more searching and might be better off to hire some help.

Thanks all.

I thought it stunk. I see this is the same thing reworded. We'll wait.

Actually, they do it to let others know that it’s none of their business, or anybodys business what agreement you’ve made with the lessee. Go look at deed’s or anything that conveys property, it has the exact same language. It’s not a shady tactic like some are trying to portray, it’s standard practice. It’s a privacy issue.

Why do they need to have you to aknowledge that you have been paid when you both know that you haven't? How would that affect their privacy? Or saying that future royalty or the mere fact that they entered into a lease contract is enough consideration to validate the lease? Privacy issue? No. Some people may try but they can't explain that away. I have been on the lessor side of this and I can tell you they trotted out the arguement that you aknowledged payment when you executed the lease, so the lease is valid whether we paid you or not. Been there, done that, got the CEO's cell#. Also got the release now, 6 months later.

Must’ve been a rare exception. Have you looked at property conveyances in the courthouse? They all have that “standard” language, because, yes, it’s a right to privacy issue. Look it up yourself. Sorry you’ve been duped by an Oil & Gas Company, but it is right to privacy language. Why do so many people automatically think that Oil & Gas Companies are bad guys & only out to screw people? They are pumping thousands/millions/billions & possibly trillions of dollars into our economy.

How does aknowledging that you have been paid, even if you haven't, or wording the lease so that you would be agreeing that they don't have to pay you a bonus [ when they are obviously offering one as inducement to sign ] because future royalty or the simple act of them accepting the lease is sufficient consideration to validate the lease? Sorry I won't buy that as a privacy measure. There is no need for that language if they actually pay. The cancelled check would be worth 1,000 words.

A lease is a contract. No contract is considered legally valid without the agreed exchange of money. Talk to any contract lawyer for confirmation. All leases must have certain provisions for the protection of both parties. That is a minor point for your consideration. More important to you is how much leeway an operator has in measuring and paying a royalty and how easily they can tie your minerals up indefinitely without payment.

Hi Gary,

Every lease I've signed had the ten dollars in the first paragraph. So, I went back to my g'father's leases in the 40's and 50's and every one of them said that. He was in the oil business and no slouch, so I would assume it is not a problem.


Wes Luke

I’m not worried about the ten dollars and more. I don’t care if they want to keep what they pay private. I am bothered by the wording that you aknowledge being paid even if you weren’t by signing the lease. That is NOT a privacy issue. Aknowledging that future royalty or the lessee acepting the lease is to be considered adequate consideration, even though they obviously offered a signing bonus as an inducement to sign, that they may not pay you, because the verbiage says they don’t have to, if you sign, is NOT a privacy issue.

Good gosh RW. (“They are preparing an arguement for court. Ask yourself, why would they be doing that?”) Are you kidding? How paranoid can one be? It is a privacy issue. Here in Texas and many other states, it’s nobody’s business what you get paid or what I get paid or what anybody else gets paid for a lease or for selling their property; therefore, the leases and deeds that are filed in the courthouse for public view have this language for PRIVACY.

Good gosh! MST, you didnt read what I said. I said I don’t care about the ten dollars and more. If they want to keep what they pay private, It’s fine with me. Aknowledging you have been paid, even though you have not been, by signing the lease, is not about privacy. So why is it there? Explain to me how it could increase privacy? Aknowledging that future royalty and acceptance of the lease alone is adequate consideration, even though they offered a signing bonus, which they need not pay because you said so, by signing the lease. How does that increase privacy? It’s a deceptive business practice to trap uninformed, unwary, mineral owners.

MST said:

Good gosh RW. ("They are preparing an arguement for court. Ask yourself, why would they be doing that?") Are you kidding? How paranoid can one be? It is a privacy issue. Here in Texas and many other states, it's nobody's business what you get paid or what I get paid or what anybody else gets paid for a lease or for selling their property; therefore, the leases and deeds that are filed in the courthouse for public view have this language for PRIVACY.

You probably need to seek legal counsel, but for this agreement to be legal, it has to state a consideration of value to be valid, thus the $10.00. I am surprised the oil company didn’t tell you about the lease bonus amount they pay for leasing your mineral rights to them. This amount is not stated on the lease agreement itself, but is paid directly to you for leasing the rights. This amount could be a few hundred to several thousand dollars per net mineral acre that you own. Be careful what you sign and get good counsel.

If that is adressed to me, thank you Mr. Mullins. I have received the release for one lease but I have another that I am also seeking a release for. They didn’t honor the draft for $9,300. Copies of the lease, the letters, and the draft are in the hands of my lawyer right now. I hope to be in court soon.

I am sorry to hear this. Check with your lawyer, but I think you are free to negotiate with whomever you want now. It is rare to find yourself in such a pickle. Most drillers want the lease and it is very competitive among Landmen. Better hunting this time…

Hi, Boys -

I am not an attorney, but may be able to shed a little light here for you all.

What you actually receive for a signing Bonus and Rentals for your lease will be reported to the IRS at the end of the year (the dreaded 1099).

To put that amount into each lease form would be quite burdensome, as most lease forms are purchased from a publisher. It's also not wise for the oil and gas companies to show their hand, so to speak - most especially in a competitive leasing area.

There are many people out there who could explain this in much greater detail (and probably more correctly), but it is my understanding that an Oil and Gas Lease, just like any Deed, is required to have the following in it:

1.) A Date and Period of Effectiveness;

2.) Both a Grantor/Lessor and Grantee/Lessee clearly identified (a lease with a blank where the company name goes, for example, would not be valid);

3.) A clearly stated moving consideration for the conveyance / lease which is typically acknowledged as having been received and adequate; and

4.) A clear description of the property being conveyed / Leased.

That's a little rough, but these points are known as the "Four Corners of the document". If you are missing any of them, the document is invalid.

Hope this helps -


Charles Emery Tooke III

Certified Professional Landman

Fort Worth, Texas

713-408-2850 Cell

Thank you, Mr. Tooke. I take no exception to the ten dollars and/or more. The other verbiage that would only come into play if lessee didn’t pay is what bothers me. Why they would want you to state that you had been paid when you haven’t. Why they would want you to agree that anything other than the lease bonus, such as future royalty or the acceptance of the lease by the lessee, by itself would constitute adequate consideration. I mean, they are going to pay you, right? Whatever purpose those two statements serve, it is not privacy.

If you want to pay an escrow service several hundred dollars, they can act as a middle man in receiving your signed documents and releasing money to you before the documents are given to the lessee. I believe this is not needed in dealing with a reputable lessee such as EOG or the suchlike.

Morning Boys -

Mr. Kennedy is correct that the possibility of the benefit of future royalties is "other valuable consideration".

And there have been instances (quite rare, thankfully) where sheister companies have tried to claim that that and other possible future benefits constituted valid consideration, and that that was acknowledged as received and sufficient in the wording of the lease.

If I remember correctly, a lease brokerage outfit here in the Barnett Shale area of North Texas tried that stunt a few years ago when their client company suddenly dropped the prospect they had been working on and refused to send them the funds to honor the drafts they had issued.

Thankfully, Judges are not typically stupid people.

Having said that, however, I should also point out that a Lessor knowingly giving a Lessee a "free lease" is not entirely unheard of either. The "promise" to drill a well within a certain number of days or months or something similar to that being the moving consideration of the lease.

You have to have a moving consideration or no transaction is valid.

Mr. Mullins, you reminded me of something that I haven't thought of for a while. There is no need to pay an escrow service:

Prior to about the early 1970's, all original signed Leases were submitted to the Lessor's bank [Your bank's Collections Department] along with the Draft issued for the Bonus Payment. When the draft was honored by the Lessee's bank, the Lessor's bank would forward the lease to the Lessee.

You are still perfectly welcome to do it that way, and thus will be completely protected.

Your Bank will charge you $50 - $75 for the service, which the Lessee might be willing to pick up the tab on - especially when the draft is for only a small amount of money.

Either that or you can request a cash item, such as a check or cashier's check.

Hope this helps -