I have mineral rights for 60+ acres in WY and the Lease is soon to expire. The land co. that negotiated the original lease contacted me and wants to sign for a one year additional period of time. She said that the oil comapny would probably like to write the year lease as an extension and when I got the papers there was the name of the oil company and two other oil companies as partners. I feel like I should negotiate for a new lease with them or shop the property when the lease expires. I don't feel comfortable signing with three companies. Any advice?
Ms. Markham, I don't see a problem with the lease being in 3 companies name. If you leased again to your original lessee they could simply turn around and assign part to the other two companies, it happens all the time so really that is a non-issue. Having 3 companies in a joint venture sounds like they intend to drill, also a one year extention sounds like they intend to drill. I am also a big fan of letting the lease expire and then shopping the lease, let the market set the price, you minerals could have appreciated considerably in the time they were leased.
Thank you for your response. I am just a little miffed because one of the companies is foreign. I agree that it does sound like they will drill---Thanks again.
I would seek additional bids from other companies and pick the best offer, signings bonus and highest royalty. Also surface protections in the lease forms.. Might help to have a lawyer go over lease. But don't take too long
Could I ask where your mineral rights are located. I also have some in Wyoming so just curious as to where you are located! Thanks Fred
I realize I am adding nothing new to this discussion but I must chime in my agreement with RW and others who suggest letting the lease expire and shopping your minerals a bit. It may give you a chance to talk with some of your neighbors and see what they are signing for and with whom. At least check around and see who the operators are in your area and see if you can contact a rep from a competitor or two. Heck, the offer with your current company might well still be on the table after your research. GAllen
Thank you all for your responses----I should have come here first...before making a verbal agreement on the phone to do a deal. Live and learn. I won't go back on my word but NEXT time I will let the lease expire and shop it.... if they don't drill and/or are unsuccessful. In response to Fred, the mineral rights are in Converse Co.
Would it be OK to ask for a land Township and Range; Most of mine is in T40N - R68W: Thanks much
Ashey Markham said:
Thank you all for your responses----I should have come here first...before making a verbal agreement on the phone to do a deal. Live and learn. I won't go back on my word but NEXT time I will let the lease expire and shop it.... if they don't drill and/or are unsuccessful. In response to Fred, the mineral rights are in Converse Co.
Even though oil companies often have a long list of partners/investors involved in a drilling venture, I think there should only be one operator listed on the lease. As far as signing an extension, that's up to you and depends on the situation. You could allow for an extension so long as they pay you a good bonus lease consideration amount. You could insist on putting in a drilling clause (they must drill within the year or pay you a penalty) and if they won't do that then let the lease expire.
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You don't necessarily have to wait until the lease expires. You could solicit offers for "top leasing"--for a lease that begins when the present lease expires (if the terms are good for you). I still think you could use an oil and gas lawyer..
Ashley, I'd like to chime in on this one too! I just read where you said, you made them a verbal agreement on the phone before knowing what other companies are paying for bonuses and royalties, etc. I guess from being in business for many years, verbal agreements especially, these days are just that, verbal! I understand that you want to honor your word, but it may benefit you to call them back to let them know you need to check a few things out first before you sign on the dotted line. They could be cheating you out of a lot of money!!
Believe me, they would not go through with any verbal agreement if it was soon after determined that it was a bad deal and they were going to lose money and by the way, they do back out of deals all the time after issuing mineral owners drafts, tying up their minerals for 30+ days and then, drop them like a hot potato!
I just feel its very unfair for them to spring this on you knowing you're more than likely not familar with the current market and possibly, knowingly taking advantage of you!
r w kennedy, always seems to offer sound advice and seems to know the ropes andI also, like what Ethlyn says, too about not taking too long or to get an attorney!
I'm just rambling, but I hate seeing anybody taken advantage of! Think about it before you sign! Best to you!
Your horse is beautiful!!
Let the lease expire and have them make another offer.