My mom has mineral rights in Richland County Montana. She has been approached with a five year lease. I'm working on her behalf and wondering how I go about soliciting a competitive bid? I also would like to know what the going lease price is in Richland County. I'm assuming the lease price is priced per acre/year, is that correct?
Thanks,
Kristi
My family signed a lease a couple weeks ago for property my grandparents owned in Richland County Montana many years ago. We received $75/acre, 15% royalty, for a five year lease. We weren't entirely sure how competitive it was but that property had not received a lease offer for almost thirty years. We decided that the money was a blessing and ended up taking the offer. We received an offer shortly after we mailed ours out and it was for $70, apparently there is not a lot of competition in our particular area and our offer looks like it was not that bad.
We learned that some owners were getting quite a bit more money than us, but their property is smack dab in the middle of the areas that are producing, we are towards the south end and it sounds like (something later confirmed by my family) the production is not in that area.
An old friend of my brothers is more familiar with the oil industry and he told us to make sure we had a "Pue Clause" or something along those lines, apparently without those the company can keep your lease for years if you don't have one and part of it produces oil. Ours did not have one and we had to ask for one to be included. The attorney said that most honest companies include those without having to be asked. He told us to maybe reconsider who we dealt with because they tried pulling a fast one on us. We sat on our lease until the end but did not receive an offer so we decided to take it. So far, we are happy. Thousands of dollars to sign a few pieces of paper was a pretty good deal when it was all said and done. I sure hope it works out!
Best of luck,
Tyler
Kristi:
Richland County is currently recieving alot of attention in regards to spacing and some drilling activity. First of all, how many mineral acres do you have? The larger the acreage, the better in negotiating more $/acre. First, I would try to contact mineral owners in your area in regards to current $/acre. Second, you can go to the North Dakota Industrial Commission website and see what this areas $/acre leased for at state auction. Keep in mind, these prices will be much higher than what you will probably get, but it will give you an idea. Third, educate on the contents of a lease and don't make the mistake of getting in a hurry, you need to shop around for the best $ amount. I wouldn't sign for longer than 3 years and start out with 20% royalty. The "Pugh" clause is a good idea as it will allow to lease in the future if a well is drilled on your mineral area. I would consult an oil and gas attorney for assistence with the lease if your unsure about what terms you are negotiating. The main thing is to take your time and shop around if not satisfied with the terms and $ amount of the lease you are presented.
Kristi:
In my post, I meant the Montana Oil and Gas website instead of North Dakota Industrial Commission. I believe you can Google "Montana Minerals Management" and that should display the recent state lease auctions. Good luck in your negotiations.
Thank you everyone for your advise. You guys have given me a lot of information to go get some research. The lease offer is for 5 years for about 800 acres. I don't know if 800 acres is considered a lot or not to get negotiating power. Also regarding 3 verses 5 year lease. I've heard the same thing that a five year lease isn't necessarily good, too long.
Kristi