Leasing with existing lease in place

Curious how this works - any help is appreciated.

So inherited property - partially under lease. Leasing company is interested in leasing everything - both the unleased and currently leased parcels.

Current lease I was under impression ran out a few days at time we signed new lease - turns out it goes until mid December.

Presuming this is considered a “top lease” and takes effect when the old lease expires under its own terms - correct? With this in mind - when is bonus due if originally agreed to 90 business days from lease signing? 90 days from signing or 90 days from end of prior lease?

All terms are negotiable and should be spelled out in detail. You should never sign any legal agreement without understanding the meaning of the terms, including bonus payments. There are differences in state laws. That is why you should consider consulting an oil and gas attorney in the state where the minerals are located. That said, it not advisable to lease open minerals in combination with a top lease of other minerals. Those should be separate transactions. If the various tracts are not continguous, then you should also consider separate leases on the tracts. Do you know what oil company the landman is representing? Is he a flipper? Why is he proposing delaying the payment of bonus for 90 days? Under no condition should you hand over a signed lease without payment in hand of the bonus due. If the lease is recorded and then assigned to a third party, you could be stuck with the minerals being leased and having to sue the original lessee for the unpaid bonus.

Lease was reviewed by an attorney prior to signing and advised it was acceptable.

Terms of payment are spelled out clearly - 90 business days upon signing.

As to payment being made upon signing the lease - NEVER experienced that in any of our last 5 with 3 different producers. Always been 60 to 120 days. Upon verification of clean title and net mineral acres - then calculated and paid.

As to lease flipping…its likely in my opinion. That being said - if there is no payment, there would be no lease. A contract for sale is only binding if the seller receives due consideration from a buyer. Im no attorney but they covered that much in community college. If a lease were recorded and payment never made - it would be as simple as contacting the courts and requesting the lease be invalidated - its then contingent upon the buyer to prove check was cashed.

Already dealt with this with an operator who drilled a shallow hole in the ground - and tried to extend a lease as being “held by production”. They of course issued the renewal payment - it wasnt cashed and because of this we prevailed prior to trial in getting the operatort to match terms.

I will also add, I completely agree that ANY complex contract of value should be reviewed by a knowledgeable professional. BUT calling for thoughts on relatively simple questions is neither cheap at $325 an hour or probably a way to endear yourself to a busy attorney office.

Just looking for thoughts on timing of payment, so I can plan accordingly. This “project” I’ve inherited is beginning to feel more and more like a full time job at times…and I have a full time job as well as other irons in the fire to keep me plenty busy. Last thing I need are unnesceary delays or problems I could have avoided. I am not a pro in O&G and got this and another far more complex O&G issue fall into my lap this year.

You should have asked this question of your attorney who advised you to sign the lease before your signed it. Your question is not necessarily “simple” because the answer depends on the exact contractual language which your attorney approved as well as state law. This is true of any legal question regarding interpretation of the terms of a contract.