Lease Expiring - Top Lease offer - 32-!8N-8W

Our family has 50 nma in this section. The lease expires mid march. Gastar obtained numerous leases in the area about 2 years ago.

About a year ago we were contacted about a top lease for $1250 and 3/16, 25% up front. I speculated that Gastar was going to have trouble drilling all their wells before the leases expired and were trying to lock up lease extensions for a nominal amount. I also felt that if we gave them an extension our well would be less likely to be drilled than the ones that didn't extend. We passed.

Three weeks ago they called again offering $2000 and 3/16. This appears that they are obviously having problems. He said the company had the well scheduled to spud mid to late Feb. but they still wanted us to sign the top lease??

Gets more confusing. A permit to drill was issued Wed. Would they be sneaky enough to get a permit to entice us to go for the 20% ??

A new lease a couple sections over just went for $2750 and 20%. What should it lease for if it should expire?

What do you pros recommend?


If you are not a professional, your lease may not be iron clad and Gastar knows it, so they want you to top lease to continue your existing lease, or they are afraid of competition in the area. Also, lease bonuses are going up as oil prices go up and we haven't seen peak oil prices yet. It might be a good time to wait and get a better bid and maybe a better operator. You are in a good geological area with multiple production zones.

Gastar has a horizontal well approved at the OCC Cause 201602792, but they still have pooling, exception and location exception hearings pending. Not all the ducks are line yet. Tributory Resources and Griffith Land Services are also leasing in the area.


There is no scenario that I'm aware of after 35 years of minerals management, that can rationalize a mineral owner taking a top lease. The risk of compromising production income is too great for the small reward; especially in an area being developed by horizontal drilling. The camouflaged terms of your lease may preclude you from accepting a top lease so if you do so, you may be liable for damages incurred by the lessee.

To be safe and enjoy the position you may be in, silently allow the lease expiration date to come then determine your rights of control of your minerals. If you have control (you have no control now) them evaluate the value of your supply for the industry demand. If you top lease and your lease expires, you have given others the right to take advantage of your supply and demand options with your leverage including the right to sell for very big bucks.

Let patience and knowledge over-ride the propensity to take advantage of the oil business. The OB has all the good cards in their hands.

Ditto from my 35 years in the business as well. Too much chance of tying up your title

and the possibility of not getting paid in a timely fashion while others are wheeling and dealing behind your back. Check your original lease and see if you have any end of lease timing issues. If none, then wait a day after the end of the lease and demand a release of lease and filing in the courthouse of such by the original holder with a copy sent to you. Send a letter by certified return receipt and by a phone call. Then other landmen will be able to see that you are clear to lease again.

Right now, Gastar is not the best operator. They are upside down with way more net income loss (-242 mil) than sales (62 mil). They could be looking at bankruptcy very soon. I've been in the business over 35 years and agree with Gary and M Barnes.

I am definitely not a professional, but I have spent the last 5 years paying attention to what you guys say. I actually considered that they might want to change the terms of the lease. It made no sense, as Cary says, for a top lease to benefit us.

They are not trying to do what is best for

Virtually all the wisdom passed here I had heard before and I had passed it on to the family. I asked the question so I could pass the information directly from the experts on to the family.

Thank you all very much


Ms Barnes

How long would it typically take to clear the pooling and location exception hearings. BTW, I am not familiar with "location exception".

Griffith is the company tghat contacted us and said they were representing Gastar.

Would you mind skimming through my lease and tell me what expenses we are liable for and what not to do next time.