Huerfano County, CO oil & gas discussion group. Share your experience regarding lease bonus, royalty rates, drilling activity, and oil & gas news.
I told the landman I wasn't interested in signing a 5 year lease with a 5 year option. So far I haven't heard back from him. I would be interested in leasing for a shorter term. Are 5 year leases standard for Colorado?
If your land is close to Shell's target area you have considerable flexibility in granting a lease. You must make sure it will be good for both parties, i.e.. Collect a reasonable bonus for taking your minerals off the market.
5 year leases in frontier areas are reasonable and common. It is harder to anticipate what the extension price should be for 5 more years. I advise my clients to get better lease terms regarding royalty protection for longer term leases. Of course if you have more acreage, you have more negotiating strength.
Gary L Hutchinson