I have mineral rights in Uintah County, Utah, 69.69 gross acres, 13.98 net acres, Township 2 South, Range 2 East.
The lease is now up for renewal. It is a 5-year paid-up lease plus a two-year option with a 1/6th royalty. The oil company is using a different land services company than before. The amount I'm being offered per acre is more than the previous lease at $400.00 per acre. However, I have no clue whether the offer is reasonable for the area and so I don't know if i should negotiate for more or for how much. If so, what are the resources for finding this out? Also, this lease is more complex than the previous one. Is it the land man's responsibility to interpret this for me or is it best to find a lawyer (I live in the metro Denver area) who specializes in this area to look at the lease for me? Any ideas are appreciated.
In my estimation, that is a "low-ball offer" and should not be taken seriously. Many of the exploration and production oil companies operating in the Uintah Basin have offices in Denver; so you have knowledgeable help near you.
Check the Utah State government oil and gas website and determine what kind of wells are in your section or sections.
Think seriously about a three-year-lease, or a three-year-lease with a 2 year extension; and, I would try for a 1/5th royalty and accept nothing less than 3/16th royalty.
Thank you. It is advisable to find an attorney that handles oil and gas leases to assist me with this, especially since I have no experience with these matters?
Also, is $400 per acre average for the area or too low? Why is a 3-year lease with a 2-year extension better? Thank you.
Four hundred per net mineral acre is low, in my opinion, The advantage of a thre year lease with a two year option, is that you get a bonus payment at the beginning of the lease and at the beginning of the option period, IF the exercise the option. If they do not exercise the option, you are free to look for another exploration company.
Becky,
If you have not leased your acreage please feel free to PM me. I might be able to help you get more bonus and/or royalty rate than what you are being offered.