Is there a rough timeline of when a land man creates a lease for me before I choose to sign it? I want to wait for more offers to come in, do more research, maybe even try to generate offers, but have concerns over blowing the offer already presented. I’m sure it differs from company to company, but will a land man generally wait a month, two months?
Totally depends upon the agent and what their boss gives for money and timeframe. Sometimes, it is days and sometimes months.
Sparkle, your dilemma is just a part of seeking the best value. You will never be able to confirm your decision until time has passed. I always look for other parties leasing in the same section or nearby if I want to shop; although, most will find you if there is an interest.
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@sparkle-motion both answers above are true and thoughtful.
Also… as a general proposition - in the vast majority of instances, whatever oil and gas exists below your tract of land isn’t going anywhere. Operate with your timetable, not some other party’s. 90 % of what “landman” tell you about “it’s got to be signed by date X”, is hot air.
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Unless an offsetting well is drilled and the production is lack luck luster or oil and gas prices fall. To answer Sparkles question, most OGL’s Ive seen and signed have a 30 day time period to sign, Im sure your offer states a time period its good for? How many other companies have approached you to lease since the offer has been made?
I haven’t noticed, or been told any lease offer valid timeframe for any OGL’s sent to me. I’ve received four so far, a few verbal with paperwork forthcoming, but I’ve reached out to a few companies that have been procuring leases in Roger Mills just to feel things out generate more interest.
You can also choose to go to force pooling in OK if it is offered for the section. I prefer it if I cannot get a good lease with the terms that I want. Another option besides leasing.
I’m definitely considering waiting for force pooling, presuming of course it gets there. Lot of learning in a short time going on over here. Everyone’s insight has been much appreciated
Any time someone sends you a lease with a time period to sign, it’s time to RUN! That’s a Big RED FLAG! How long did they tell you they had to pay you if you signed? That’s extortion!
Sparkle a little common sense goes a long way in negotiations. An end date on an offer is common and practical; otherwise, you could try to come back in a different market and enforce the offer. When they try to offer you a draft payment for the OGL, then you have to make a call that is reasonable. The draft/OGL system works well for the landman, but is not meant to benefit the mineral owner. I generally tell them to confirm their title work and then we can complete the deal. They can get updated title work in a matter of minutes with technology and information systems. As my mentors belabored to me, patience helps make better decisions.
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James, Bobby, M_Barnes, Mineral_Owner5, FJonesIV Thank you for your words of advice. My current thoughts and conversations are really contemplating waiting longer, possibly to a state pooling order. I think I’m doing a good job, getting great advice from everyone here, taking my time, learning how to make the most educated decision. Yet unfortunately, I’ve been acting as the lead between both my recently inherited assets and my brothers. He has been pressuring me to take a lease because he thinks we are gonna lose out, and I’m thinking there is no rush right now. One reason is, and please chime in with your thoughts and opinions. I’ve been told by an expert that I contacted, that 1/4 royalty offers appear to be very common regarding the force pooling that’s been going on recently near my area of interest. Obviously, that might not end up being the case, but this individual was extremely helpful, even pulling up some expensive proprietary software and Skype calling me going through the recent happenings in my area. If that is true and 1/4 is offered at force pooling, it appears that I would stand to make more per acreage on the bonus end compared to what I’m getting offered now, because land men everywhere will hear about it and want to get their play in the game? Possibly substantially more. From several sources I’ve heard word of land men selling their accrued leases to the operator for close to triple what they are paying me for it. Example being an offer of $600/acre 1/4 royalty being sold for $1750/acre to the operator.
Is it true that once a pooling order is announced, that is when the heat really picks up from the land men, and it’s the best time to get the highest offer?
I’m also considering just waiting a year to see if more permits, spacing units, or well construction and general oil and gas related activity start to increase in this area, as that appears in theory to increase the value of nearby minerals.
Just as a side note. Is it often the case that the land men already know who is getting the well permit, or are in-cahoots/hired by specific operators? A few people talking Mewbourne with a confidence that seems less speculative and more like they know, but without saying it. But I also think they might be trying to blow smoke up my a**, but talking about my lease going to Mewbourne, Devon or Crawley implies a lot.
One guy even told me these operators have tendencies to these companies; Crawley in bed with Aztec Devon gets real cozy with Upland Mewbourne spoons Rock Creek
Anyone heard anything like that? Oil and Gas business is a trip
Thanks, -Jake
You’ve already gotten what, to me, looks like good and diverse advice. I’ll preface what I’m going to say by stipulating my experience relates to Texas and Louisiana. There may be aspects of leasing in Oklahoma that are different.
I didn’t see any mention above about the size mineral interest you have, and that can impact the leverage you’ll have in negotiating a lease. If your interest is small some of what follows may be moot. Based on your comment that you’ve already gotten four lease offers, I’m going to asume you and your brother control enough minerals acres to carry some weight.
My free advice is, concentrate on the one or two offers that appear to put you in the best position to get wells wells drilled. Knowing the lessor you are actually dealing with may be the only way to decide that. If all the landmen present offers to you can’t, or won’t, say who they are representing, that to me would be a basis for waiting.
How much have you tried to negotiate with any of the different groups who made offers? Have you told them that before proceeding you require verification of lessor (principal) they represent? Have you tried to negotiate the terms, and provisions of any of the offers you’ve received? If each of those offers was made on the basis of “take it or leave it”, I’d be disinclined to proceed.
Regarding the question of how long you might have to accept an offer, the negotiating process itself has often been my way of testing the market and buying some time to see what develops. Having multiple groups interested in leasing from you should offer a chance for some negotiation. Along with trying to be sure you are dealing with a proven operator (with an exising position in your area) rather than just a lease acquirer, don’t limit your focus to the bonus and royalty amounts you are being offered. Getting the right special provisions added to a lease, and getting some of the basic wording deleted or altered, in the long run could the most important thing you negotiate. Pick out what appear to be the one or two best offers and propose the specific lease changes you want, even if some of those points go beyond what you would actually be willing to accept, and see what reaction you get. The landmen may say up front those points are impossible, unreasonable etc, but if they want your acreage your action should result in some movement from the other side. If they are motivated to acquire your acreage, know they are competing against other offers, and the agent feels you are trying to come to an agreement with them, rather than just playing games, they should be wiling to work with you.
If you haven’t tried, a final suggestion is to learn what you can from neighboring mineral owners. It’s hit and miss, but sometimes cold calling people in your area, starting with the folks who appear to control the most mineral acreage, can provide great information. There definitely can be dead-ends but if you can get across to folks what you are trying to accomplish, you may find others willing to share information, or possibly even negotiate jointly.
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Dusty1 Thanks for your thorough reply, it is much appreciated. I don’t think I have what one could consider much acreage. Between my brother and myself it’s 13.33 acres involved in this lease. So if we don’t agree on taking the same offer, I’m negotiating with 6.66. Not sure how much leverage either of those NMA’s gets me, I’m guessing some but not much. I’ve been contacted by two companies and reached out to a few others and two of those got back to me. And again, thanks for your replay! It is full of a lot of valuable advice:)
You, your brother and any other mineral owners in this tract or acreage interest need to stick together and deal as “one”. Get a good lease form and lease it and get your money! If you had 130 acres or !,300 acres of mineral rights it might be a different deal. There is no way I would want to be a working interest partner and wait year’s to get a dollar.