Lease - Ventura, CA - Maverick / Vintage Petroleum

Oil and Gas Leasing Help
1

I have a few questions in regards to a oil lease offer, and I want to see if the offer was fair. I also have a few other questions in regards on what to do next if no exploration has taken place at the end of the lease term. There appears to be considerable drilling activity and quite a few producing wells in the general vicinity now, however no activity on this particular property at all after 2 years into the lease.

Basically an offer of $25/per net mineral acre with a 1/6 royalty with 5 year lease and option to renew was received. This offer was countered with $40/per net mineral acre, and 1/4 royalty with 3 year lease. After further negotiating the final lease was agreed upon at $40/net mineral acre, and 1/5 royalty with a 3 year lease.

The rest of the lease was only "glanced" over and a professional never reviewed the lease agreement. I will admit this was a bit foolish, and the lease was signed hastily, but at least a somewhat better deal was negotiated and with a fewer year lease term in case no results were shown. After doing some research recently, I realize now that more attention should have been shown in regards to "pooling" and some of the other sections in the contract.

I didn't want to post the whole agreement here as it is quite lengthy, but maybe I should post some of the sections, as I would like to get some feedback/advice on what actually was agreed upon and what they can and cant do. I would hate to find out that they have been draining the oil underneath this property by using wells on adjacent properties. The final year of the lease is being entered and I don't believe any progress in regards to mineral exploration has taken place on this land.

If at the end of these 3 years and nothing has been done at all, would the next best step be to contact another petroleum exploration company and see if they would be interested instead?

Below is some more detailed information:

Maverick Petroleum / Vintage Petroleum-

Oxnard Prospect #12-81 (33)

APN: 230-051-43

Parcel: 1

Gross Acres: 47.2450

Net Mineral Acres: 11.8113

Mineral Percentage: 25.00%

Offered:

5 year, option to renew for 5 years

$25.00/per net mineral acre.

1/6 royalty

Counteroffer:

3 year

$40.00/per net mineral acre.

1/4 royalty

Agreed offer:

3 year

$40.00/per net mineral acre

1/5 royalty

1011-oil1.jpg (118 KB)
2

Hi!

First, I presume that you now know that the oil company is California Resources Corporation (or California Resources Petroleum Corporation or California Resources Production Corporation) which is the old Occidental Petroleum company. If you are in the last year of the lease and they did not keep in an option to renew then you have the right to seek to re-lease it to anyone that is interested. The likelihood is that CRPC will either come and seek a renewal or you won't have a lease since there is not a lot of exploration going on right now.

You can renegotiate the lease if they seek a renewal, but know that the pooling provision is typically one that they won't negotiate much and given your interest it is unlikely that they will do so.

Good luck!