Hello, we have minerals in S4,S7,S8, and S18 of 10N 66W. Offer on the table seems awful low but I’m getting nowhere with trying to negotiate. They are actually threatening with forced pooling. I’m new to all of this and consulted with an experienced attorney who gave me an idea of what to expect for a good lease. Can anyone give me any pointers?
Not a ton of activity around you in those sections, closest rigs right now are at least 12 miles away. Additionally, this township would be considered to be on the fringe of the DJ basin. As such, your leverage is limited given that there may only be one operator interested in leasing (or their affiliates that do the actual leasing) here.
Another factor to consider, how large of a mineral interest do you have in those sections? Bigger chunks of acreage to lease gives you some leverage. If it’s smaller interest (less than 80acres or so per section) then you will lose that leverage.
only companies in that area are edge energy. Other companies do leasing for them. I don’t see getting more than $50-$150 in the area if your lucky. If you have an offer higher than that, take it.
We have 25% interest in about 1200 acres in those sections. Offer on the table is $200 and 16.6% up from 15%. After looking at activity just north of us the attorney felt like asking for 20% wouldn’t be out of line. Royalties being more important to us than anything. Looks like advice here is contrary to attorney’s opinion. I was told by the agency trying to lease these for Edge that they were the only option, I found this hard to believe. Edge is only using one agent?
Thanks Cole. If you’re advice is good then we should take the offer. Anyone else have the same opinion as Cole on this?
I don’t know where you are in your negotiations, but I would try for 18.75% if you have not done so yet. No harm in trying.
Your 16.6% is a little more than 10% above their initial offer, I don’t know of an increase in the bonus. In my recent lease with Bison I accepted their 18.75%, was able to increase the bonus from $200.00 to $340 however the lease term was changed to 3 years with an equal paid up bonus on renewal. Perhaps changing your term would be acceptable alternative, best wishes for desireable terms.
You are all right, there is still room to negotiate. We’ve decided to let them come back with a counter offer since they have rejected my request for $500 and 20%. If they won’t budge then I guess we will see if their threat of forced pooling is real.
FYI - Here are the COGCC rules on how they determine whether a fair offer has been submitted. FYI - Weld county has a standard 22.5% term on their leases.
500-35 As of February 14, 2019
After receiving an offer to lease and given at least sixty (60) days to review the offer, the unleased owner has failed or refused a reasonable offer to lease. In determining whether a reasonable offer to lease has been tendered under §34-60-116(7)(d), C.R.S., the Commission will consider the lease terms listed below for the drilling and spacing unit in the application and for all cornering and contiguous units that are under the proposed lease: A. Date of lease and primary term or offer with acreage in lease; B. Annual rental per acre; C. Bonus payment or evidence of its non-availability; D. Mineral interest royalty; and E. Such other lease terms as may be relevant.
FYI, I didn’t see any Weld County leases nearby. Next would be State Leases. Lease OG-109980 seems to be adjacent and could be considered. I don’t know the terms on the lease but you can request a copy of it on this web page: Select the "Request copies of… button.
FYI - If you want to search for other state leases you can use this web page to get the lease number: https://gis.colorado.gov/trustlands/ Change your layers to view surface leases. Hope this helps.
Have you seen the Bill going through the Colorado Senate and House, SB19-181? The bill will have a large affect on Oil and Gas in the State of Colorado. My guess, is leasing will soon become almost non-existent, until people can figure out what is going on.