Is it best to sell rights to a producer or a middleman aggregator?

I own some mineral rights in Gaines Co. and am talking to a landman working for an oil co. that doesn't seem to have anything in production. Is it not better to lease your mineral rights directly to a producer rather than to a middleman?

If the landman is working FOR an oil company/producer then it's fine to lease to the (landman) middleman, since they likely hired the him/her to buy leases on their behalf anyway. I also usually ask whoever is leasing me if the company plans to drill a well or if they instead just want to "participate" in the well. Really doesn't matter to me, though some would say the producer would pay more for a lease than a "participant"; though I have found just the opposite to be true if the participant really wants a look at the well but can't afford to drill it themselves (thus they will simply buy a lease or two and get a "free" look by contributing their leasehold to the project).

There are people out there who will offer to lease you who have no interest other than to "flip" your lease to someone else (the producer perhaps) for a profit. THESE types are not working for an oil company, but rather for themselves in the hopes of making a profit on YOU. In that case better to lease directly with the company. Sounds like your landman is working for the oil company but you can always just ask if you are curious. You could also ask them if they (the landman) is going to profit from your lease in any way other than his normal salary/day rate the company is paying him. If "yes" then that would be a red flag to me.

Hope this helps you out.

Frederick M. "Mick" Scott CMM, RPL

The Mineral Hub