I inherited oil & gas producing minerals from my grandma in McClain County, Oklahoma 3 years ago. Section 03-T05N-R02W. The lease is being renewed and I have no idea how to negotiate this. It isn’t much to begin with but I feel like it is undervalued. The guy said it isn’t valued high because big name gas companies are not drilling in that area. I have scoured for information with little free information. This stuff is too complex for me to understand with nobody to ask as everyone has their own interests in it so they are not looking out for me the owner.
1 Like
How have you determined an expected value? Is it what you want or some other method? Are you willing to wait for a better offer even if one does not materialize? The only person that will be looking out for the mineral owner is the mineral owner. When a landman tries to establish the perception of a common goal or interest with a mineral owner, that is just a closing technique. Time is always the side of the mineral owner if they can live with the stress required for patience.
1 Like
When you say it is being renewed, was it part of an option from a previous lease, or is this a brand new lease? The answer makes a difference in how to approach the situation.
Charter Oak is one of the main operators in the area. Several companies were leasing in the last four years. I do not see any leases filed this year in that section. Capstone just filed in 2025 for section 2 just to the east of you.
Answer the first question and then we can go from there.
I have no way to determine value. Only able to find tidbits from other forums without having full knowledge I can’t really say.
I also need to do this as I believe I should get more than $0.006 on the dollar…js
Capstone is the company. I assumed it was a renewal since the previous leases from them were after 3 years each time. It does not state that it is a renewal. What is confusing is the number of acres I have versus each lease has a different number of acres attached to it. I assumed it was because they move around on the whole acreage with each lease agreement.
If your 0.006 is your decimal on the production, then you are already held by lease at least for that well. That number comes from an equation in OK: net mineral acres/actual spacing acres x royalty x percentage of perforations in your section. For example, 5 acres at 640 acre spacing, 3/16ths royalty and 50% of a horizontal well would be 0.00073242- so quite in the ballpark of what you quoted. The eight decimal places account for every penny for $1MM in sales.
It is wise for the novice mineral owner to get professional help for their first time negotiating leases. The draft offered by an agent will not likely be in your favor and needs multiple clauses struck and replaced by more mineral owner friendly clauses. Most of us would prefer the highest royalty offered as a productive well over many years will give higher royalties than the one time bonus for a lower royalty. And if future productive wells are drilled, that difference is even greater. One of the most important clauses is for no post production charges-at all! Legal work by a novice writing their own lease can cause great difficulty down the line.
If you cannot afford an attorney, then you can wait for forced pooling in OK. It has its own benefits.
If you had an option clause in the original lease, then the grantee on that lease holds all the cards. They can choose to renew or not at whatever terms suit them. If you had a price and royalty guaranteed in the first lease, then that may give some help, but the clauses will often stay the same.
If you had no option clause, then you are free to lease with anyone else at the end of the term. Or wait for force pooling.
Establishing expected values and facts provide a basis for your negotiations; otherwise, how do you determine it is being undervalued? In Oklahoma you can always wait for a forced pooling if the current OGL terms are not acceptable to you.
Some members of this forum may have properties in this area and could possibly provide insights as to certain value trends. @M_Barnes has already said she could not find any recent OGL filings. This should provide you with a sense of activity in the area.
When I have been on the landman side of this, I quickly moved on from those that expressed no interest in my buying range. That does not mean they will not circle back though but, they will rarely pay more than what they determine the cost at pooling will be.
That is not the case with mine so not sure about the decimal situation for that other person on this thread. Mine are not enough to warrant an attorney. I have to do this on my own. Just not sure how to value it and negotiate it.
The lease will usually have the gross acreage of a tract of land, not the net. The gross should be the same if the lease was in the last five years unless new information has come to light such as inheritance.
Most of the leases in that township have been at 3/16ths royalty with a few rare 20% and 25% ones. Bonus amounts are not public. Not likely to be very large here.
Sitting back and waiting for a forced pooling here may be a good option for you. May take a few months to years of waiting, but a good force pool is better than a bad lease.
1 Like
Thank you for your help!