So we were presented with a lease and needed to have it signed soon. We have told the company that we will not sign the lease they have offered. We have heard nothing back from them and it has been a week. We already feel that this individual we are dealing with does not have our best interest at heart. What I want to know is how long should we wait before hiring a firm or lawyer? Do we need to hurry, or should we wait?
Dear Ms. Parker,
Have you presented them with a lease form that you would be comfortable in signing for their review? That would be the typical process.
Ms. Parker, I think they are playing the game. Extreme urgency, then wait. I have received offers while a well was drilling and even after. What Mr. Cotten says has merit. I believe it might be beneficial to provide a counter offer, so they can’t just say you refused to lease, in which case they could force pool you and probably receive a risk penalty. If you make a reasonable counter offer, and you don’t wind up leased, I think it could leave you a window to protest any risk penalty. Under Wyoming law I think they would be happy to force pool you, and impose a risk penalty. In other states, and probably yours too [ though I can’t swear to it ] the oil co must make a good faith attempt to lease you. I think the terms the oil co have offered you are probably the minimum to constitute a good faith attempt. In your place I would make a counter offer for the most I think any outsider would consider reasonable, certainly within the realm of negotiation. I would hire help to put it together, and probably search other recent leases in the county to make sure that my demands were not too far out of line. You could then pass the hot potato back to them. It may be time to consult with your industrial/oil and gas commission, to find out what, if anything the oil co must show before they could force pool you and request a risk penalty be imposed. You have my best wishes.
Ms. Parker:
I agree with both Mr. Cotten and Mr. Kennedy in their responses and am in total agreement that they are playing a game hoping you will give in to their terms. These are you're minerals and you lease them on your terms and your time table. You will be fine if you don't get in a hurry and let them come to you.
Peggy,
Mr. Mallory is right. The minerals, if present, will only become more valuable. The first offers are only a slight indication that somebody else sees value in your minerals and you can bet your bottom dollar that they do not have your best interests at heart in a negotiation. Assuming you like owning the minerals, determine what they are worth to you as their ownership enhances your lifestyle. Set your lease terms (the fine print) that suit you and protect your expectations for long-range enjoyment if that is what you want. If you have no long term expectations, set a " take it or leave it" transaction price and transaction terms (bonus) high enough that you can enjoy the cash and never look back with regret figuring that production income, if any, will be icing on the cake. You can also set a time limit as that is not a unilateral option in this business or any business.
If you need help implementing either scenario, enlist an expert that does this sort of thing and give him or her some specific directions and goals with the final right to approve any transaction. That is when you may need an attorney.
If you hire an oil and gas attorney you are taking a risk because most of them have been retained by the industry and will not draft a lease that benefits you and protects your land. Most people have no idea what their signing and what the impact of drilling will be on their land, air, and water. They also don't realize they could be getting a higher royalty rate than what their told. Only one company that I know of exists as a trustworthy consumer advocate - Citizens Shale Advisors.com They're veterans of the industry working for people not the energy companies.
You don't have to sign the lease presented to you or accept the smaller royalties. You have options