Need help with first lease offers - THANK YOU!

I am Co-Exeutor of my grandparents Estate. I received two new oil, gas & mineral leases and although I have done my best to research and educate myself as much as possible I still do not feel comfortable in knowing whether or not the leases are ok to sign and return. Both leases came with a bank draft that will be honored once the leases have been signed & notarized and returned. The terms of the lease seem to be ok however it is the royalty payment and bonus amount per net mineral acre that I am not sure about.
I would appreciate any guidance, thank you in advance.

Lease # 1

1. We have 50% minteral interst in approx 99.93 acres in the Jackson Hall league, Milam County

2. Offer is for $125.00 per net mineral acre for a 3 year lease. The lease provided for an 18.75% royalty on all oil & gas produced from the property.

Lease #2

1. We own 47.2775 net mineral acres in the 132.654 acres of land in William Eastland Survey in Lee County, TX

2. Offer is for 200.00 per net mineral acre for a 3 year lease. The lease provided for 1/5th royalty.

You probably should have an experienced lawyer look at both of these, particularly since are one of the executors and have responsibilities to others. Usually legal fees can be paid by the estate. Also consult with your co-executor. In addition to a lawyer, super landman Buddy Cotten can help with lease forms and financial negotiation. Google for Buddy's web site or find him as a member of this forum. (Also, in many states you could have the right to a reasonable fee for serving as an executor.)

Please get oil& gas,mineral attorney. No bank drafts, know everything up front. Do not sign anything before attorney reads and searches company. Jerry& Linda.

I reiterate two points:

  1. Never accept a bank draft for payment. Ask for certified funds and don’t deliver the lease until the money is in your hands.

  2. Hire an attorney, you will get a better lease and it will protect from liability as the executor of the estate.

Check out our website at and contact us if we can help.


The offers sound very low. I also recommend hiring Buddy Cotten to assist you, but he may not be taking on any new clients at this time. If not, hire a board certified oil and gas attorney to negotiate the bonus, royalty and the lease terms. Forget accepting a lease draft. As others have stated, don't sign the lease until you have a cashier's check or company check in hand. Good luck!

The first offer is merely the point at which one begins negotiations. Ask for 25% royalty, many companies will pay this, but they may have a bottom line that is acceptable to you or not acceptable to you. No bank drafts. Definitely need to get an oil and gas attorney. I can send you a good lease form that I'm certain any good attorney would say was excellent. You will have to friend me for that. Take your time. My uncle was in the oil and gas business over 50 years, mineral owner as well as lessee, and he sometimes spend well over 6 months negotiating a lease. (I don't recommend that, but there you are).

Never sign based on a draft. You can likely do better on the terms. There is enough involved to justify getting an attorney.

As much as I don't want to say so, I agree that there is enough acreage here and enough hesitation on the Lessor's behalf for him to consult a qualified attorney. I also agree that you should not accept a bank draft for this amount of acreage, for "rooftops" or other very small tracts, I think it's OK to take the bank draft. I have no experience in the areas mentioned, but the bonus amounts do seem low, royalty amounts might not be too bad. Definitely get a Pugh Clause, especially if they are drilling vertical wells.

Thank you to each one of you that replied and offered assistance, it is greatly appreciated. I have been helping to manage the Trust/Estate of my grandparents since my Grandfather passed away in 2007 and have fully managed it since the passing of my grandmother in 2011. I have worked with Division Orders but since my grandmother's passing this is the first time I have received a new lease offer so I just wasn't sure how to proceed. From all of the replies...

1. I will not accept the bank drafts

2. I will counter with request for higher bonus

3. Mr. Hicks, I would appreciate a good lease form to use as a guide. I have found some websites offering iron clad lease forms and have wondered if I should do this to insure the leases are worded properly.

4. The advice received here highly suggest hiring an oil & gas are my concerns

*There are 5 beneficiaries involved and most of them feel that I should take care of this "in-house" and not spend Trust/Estate funds on Attorneys. I'm torn on this b/c I don't want to spend unnecessary money or be "taken" since I'm somewhat new at this. Is it possible to do this w/o an attorney? For example if I revise the lease document and counter for better bonus payments and at least 1/4th royalty? I want to do the right thing for all of the beneficiaries but at the same time I would be spending Trust money that ultimately belongs to them and there is not much.

I just want to say that I am a new member on this forum and I have learned alot just reading through posts and various forum topics. I have alot to learn and just want to do right by my grandfather since he entrusted me to be the Exectuor. There is alot to manage but I also have a full time job so I'm trying to learn as much as I can.

Thanks everyone and have a great day!


You could hire a lease consultant to negotiate the lease for you if you don't want an attorney.