My husband inherited mineral rights in Lincoln County and has received a lease offer from Jackford Land, Inc. In the past I’ve stayed out of these dealings, but have taken over all financial responsibilities and am now trying to learn as much as possible about this topic. I’ve found a lease he signed in 2019 and the amount offered was quite a bit more. Do they typically lowball? It’s not a lot of money so I’m not sure it’s worth hiring an attorney for assistance.
Offers tend to be down substantially from pre-covid. I look at leases in the following order of importance:
- Royalty rate
- Lease terms
- Lease bonus.
This post is not legal, tax or investment advice. Reading or responding to this post does not create an attorney/client relationship.
Covid strikes again! Thanks for replying, I appreciate it. I realize how much I have to learn but this forum has really helped.
As Richard said, the bonus amounts are down right now. Lincoln county is not a high priority area, so they are usually lower there in comparison to some other counties. The lease terms are critical. The draft lease that the agent sends is rarely in the mineral owner’s favor, so it is wise to get an attorney to look at it and make the proper edits. If paying for an attorney is not feasible, then you can wait for a forced pooling if it happens. Many of us prefer a pooling over a bad lease.
Here is a booklet that might help get you started.
0_Royalty-Owners-Booklet-112020.pdf (6.8 MB)
Thank you. I’m reading everything I can at this point! They are stating that the terms sent will be the pooling terms, so I’m not seeing a reason to take action now. It’s a small amount of money, so I’d rather just wait and see if forced pooling happens at this point.
I usually go with a pooling if I cannot get a good lease. It is essentially a six month or one year agreement instead of three year. It has a defined horizon, so I can lease or pool above or below in the future and get another bonus. Most of mine have not had any post production charges and the bonus is usually paid quickly. I go for the highest royalty as the bonus is fairly insignificant compared to the royalties for a successful well.
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