I own less than 10 acres of mineral rights in Section 29 Township 8 North, Range 3 West in McClain County, Oklahoma. I recently received a call wanting to lease my property. They are offering a 3 year lease with 3/16th royalty and $350 bonus per acre or a 5 year lease with 3/16th royalty and $500 bonus per acre.
I have a couple questions.
Your help will be appreciated.
Most offers start low and have some room for negotiating. If they offer 3/16ths, I always ask for what they are offering for 1/5th and 1/4. I would rather have a higher royalty if I think there is a good chance of drilling. I take the shorter time frame as who knows what will happen in five years. Many of the leases in that section have been at 1/5th (20%) or 22%, so the 3/16th is low.
There is an excellent notice put out by the Oklahoma Corporation Commission for mineral owners. It explains force pooling. Pooling Order Information
I like pooling in many circumstances.
The clauses in the lease are much more important than the bonus. The draft lease they offer is all in their favor and not in the mineral owner favor. However, many of the clauses can be negotiated.
Thank you so much for the help. Sorry it took so long to reply. Holidays.
I read the OCC info on forced pooling. I have a couple of questions. It states “The order provides Respondents 20 days to either participate in the well or elect to take one of the fair market value alternatives”.
If I choose to participate, is that a working interest? I currently have a royalty interest.
If I choose the fair market value alternative such as a lease, am I able to negotiate things like net vs. gross, indemnity, and depth?
Your help will be much appreciated.
There are usually about four-five options given. One is for a working interest. The casual mineral owner should not pick that option without really knowing what they are doing. The rest are royalty options. You can choose any of those options-there is no negotiation on clauses as they are set by the order. Or you can lease independently of the order whereupon you can negotiate the terms. Best to get an attorney involved if you choose that path.
If you do not lease and you do not choose an option within the 20 days, they will assign you the worst option at 1/8th.
If you’ve been assigned the 1/8th by default, will there be an opportunity to re-negotiate again in the future?
You will continue to receive the 1/8th as long as the pooling order is in effect. You can lease other formations not covered by the order.
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