Lease Offer Inquiry

My question pertains to Jones County MS, but I posted there in Feb and didn’t get any feedback. So I just want an opinion in general. The area is Township 6 North, Range 11 West of Jones County, MS (First Judicial District). The offer is $100 per mineral acre for a 5 year term and a 3/16 royalty. The offer seems archaic. Is there anywhere in the country where minerals are only worth $100/ma? I live in Texas and know nothing about MS. Thank you for any feedback.

I can’t speak to Mississippi values, but I don’t like a five year lease. Too much time. Three years is my max. $100 leads me to think it might be gas, not oil. Ask who they are leasing for, when they plan to drill, what zone, etc. That will give you a clue if it is a speculator or someone serious about drilling. (The five years hints that is speculation to me).

How do you handle negotiating a lease for a small amount of minerals where the bonus wouldn’t even start to cover the expenses of having an attorney look at it or revise it? I talked to the company retained to acquire the lease for an Oil and Gas Company. They said that the interest was in heavy crude in this area. They said they would do a 3 yr lease with a 2 yr. option to renew. They said the company was committed to drilling.

It is a bit more difficult if you do not have a lot of minerals. I am not giving legal advice, but I do not allow the two year option to renew as that leaves the ball in their hands and not yours. If the company was really committed to drilling that clause would not be in there. Some of the clauses that you want to check on the lease are: you do not want any post production charges, limit the shut in time, have a depth clause, have a commencement of drilling clause, no warranty of title, etc. Read the Mineral Help above and ask folks on the Mississippi general forum if post production charges are legal in Miss. You will most likely have to make changes to the lease and add an Exhibit A.

Especially with such a low bonus.