Back in February 2021, my family and I leased some acreage (minerals) to Surprise Valley Resources. The properties involved were obviously later farmed out to Comstock. That lease expired on February 5, 2026. We recently received a letter from a land agent, claiming to represent Comstock, requesting that we extend the lease for another two years, offering the same bonus and royalty percentage as the original. My question is can we negotiate a better bonus and royalty before agreeing to extend?
PS - I couldn’t find any language in the original lease stating that the option term would be at the same price/percentage as the original.
Any advice or suggestions will be greatly appreciated.
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JN –
The way your question is worded, especially the offer you received from the Comstock landman, it seems that there was not an option to extend the original lease. If that, in fact, is the case, you have the alternative to negotiate new terms.
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Hi Phil,
Thanks for responding. There actually was an option. Original term was five years with a two-year option. Does that make a difference? Please let me know what you think.
@Jneves2629 If your lease had a primary term of 5 years with an option to extend for another two years, and it was the original primary term of 5 years that expired, then you’re pretty much stuck if the lessee wants to extend the lease. Your one saving grace would be, if as you say, there was no language within the original lease or any exhibits attached thereto regarding what the lease option would be. If this is the case, then I’d say you’re free to negotiate the terms of that extension.
A word to the wise, location of your interest is going to be important. I would find out exactly where your interests are in relation to the new play, the Western Haynesville, that is forming. This will determine your negotiating power to extend the lease and for what terms. This would also be very important if you were considering selling any minerals as well.
I would definitely look for a professional, like a landman or attorney, to review your current lease and get some details as to where your interests are situated in this area.
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JN -
With an original lease date of February 2021, and you say it was a 5-year lease with a 2-year option, and Comstock paid the option, then you are still covered under the 2021 lease. I cannot answer your question without knowing if the 2021 lease and all option periods have expired. On the other hand, a company who has the right to extend the lease under an option clause usually does not contact the mineral owners to sign a new lease unless, of course, the lease terms and all option periods have expired. They would simply send you a draft/check for the option period and you might not even get a letter or other notice of exercise of option.
Why don’t you get in touch with the Comstock landman and ask him exactly what Comstock considers the situation with your lease to be? Then, if you need assistance with a new lease, certainly reach out for legal assistance.
Phil
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Thanks Kyle, et al,
There are two reasons I thought we could negotiate new terms, those are:
A) the formal request to extend the lease arrived 30 days after the original term expired, and
B) unlike other leases we’ve done directly with Comstock, that lease doesn’t specify a bonus amount for exercising the option. The more recent lease (directly w/ Comstock) has the following language:
“Lessee is hereby given the option to extend the primary term of this lease for an additional two (2) years from the expiration of the original primary term thereof. This option may be exercised by Lessee at any time during the original primary term by paying the sum of XXX Hundred Fifty Dollars ($XXX) per net mineral acre to Lessor and mailed to Lessor at the above address.”
Here’s hoping we can get a better royalty this time! I really appreciate all the feedback.
JN
Respectfully, a lawyer is not necessary. Contact Comstock Division Owners relationship department BY EMAIL and explain precisely that your lease expired and you are requesting that lease number and a legal description of the location of the property. Give them all your contact information and a scan of your lease. They do NOT take phone calls.
From there you can find a wealth of information online on the location of other Comstock Wells and their status. Be patient, go one step at a time.