Grady County 18-8N-6W lease negotiations

Would appreciate hearing from anyone regarding new lease wording. Do any of your current leases include (or have you successfully negotiated the elimination of):

1. post production cost deductions

2. additional Top Lease offers

Also, can anyone verify what current lease payments are with what royalties?

We have been offered $3,500/acre @ 3/16 royalty.

What have others been offered for a higher royalty (i.e. 1/4 or 5/16)?

My standard Exhibit A includes a clause eliminating post-production charges, and I don’t think anyone has ever balked at this clause.

I tell prospective lessees that, on advice of our attorney (true), we accept optional extension clauses only upon payment of 150% of the original bonus, and we require filing of the extension. One has accepted these terms. All others have chosen to strike the optimal extension. I regard either outcome as a win.

Thank you, Rudy.

If you "friend" me on this forum I can send you the Exhibit A that M Barnes uses -- and covers ALL of the above and is necessary so the oil companies don't remove all your royalty. Tell the landman you have to have this Exh included...

Also, it seems like royalties of 3/16 and 1/5 almost yield the same Bonus amounts as of late. If you ask for .225 or 1/4 there is a reduced Royalty offered. The amounts vary and it depends on your negotiations, but if you are offered ( asked ) $6000 per acre at 1/5 one might expect the bonus to reduce a bit -- say to 5,500 or less if you are not careful.

By the way if you are offered 3,500 this is most certainly a low-ball number especially if you have just recently been contacted!!!

On the Exh A ( this is where you override all the contract clauses that don't benefit you ) don't don't don't give in on the deduction items - they can rob you on these items.

Don't forget there is no standard for these dealings --- if you get an offer -- go back with a asking price that is at least 2 to 3 times as high. It's not unusual to start at 1,300 and end up at 6,000. It really helps to get several landmen bidding --- so wait and see if you get more landmen contacting you. Don't rush -- I have been contacts for the past 6 months on the same tract of Minerals -- time is your friend. The landmen want to get a deal done and move on -- don't let them do that to you. If you have 50 acres or more this makes your negotiating position even better.

Thanks, Bud. We do have an Exhibit “A” with both depth and no deduction clauses. We have a current contract that expires in less than a month with the same company with whom we are working on current offer. I will “friend” you so we can discuss more. I sure appreciate it.

PS - how do I add you to my friend list?

Think you click my ICON then click something in there -- :)

That worked - thanks.