Negotiating an oil lease

We have just received a lease offer from Todco Properties, Inc. We’ve been leasing for several years but we have always been called by a landman in the past. This time we received the offer in a letter. We have been given 4 options. In the past when I spoke with a landman I could negotiate a little bit. I’ve recently learned that there are many ways one can negotiate a lease, although I do not know what they are. Something about getting the company to come back and renegotiate when they go so deep or something like that. But with just the paper form it seems negotiations would drag on and not be very good. The company didn’t include a self-addressed, stamped envelope, either. Should I just forget about trying to negotiate something better and send in one of the options?

If that is your first offer, you probably should wait for more as there will be more. If there hasn’t been a pooling there is no need to be in a rush.

The letters are standard these days from many companies. I do not sign any of them. I wait until closer to pooling and see what others offers come in and then negotiate. If I cannot get a fair lease, then I have no problem with pooling. Actually prefer it in some cases.

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How do you know when pooling will be? How do I know if I’m getting a fair lease or not? I know you prefer pooling at times but my experience and my cousin’s experience was not good with pooling. Is there some place to learn how to negotiate these leases? This lease is for Grady NE/4 Section 01-06N-08W.

I really appreciate all the responses. Thank you.

i think a very good point was raised - how does one negotiate a lease that has been pooled? you pick what bonus and royalty but you have no selection re the lease that you have to live with forever. also the state where your minerals are located is important. i have found ok to be fair whereas NM is not where you want to be pooled- there it is lease b4 pooling because pooling in NM will definitely be to the advantage of the oil co

If there is to be a pooling in Oklahoma, notices will be sent out several weeks (usually) to the respondents on record.

Evidence will be presented by the operator at the hearing as to the bonus/royalty offers made by the operator in the spacing unit and the surrounding eight contiguous sections during the last year. Geologic evidence is also presented which justifies the pending well. The commission will determine the options that will be presented in the order. Respondents have 20 days from the date of the order to select their option. I send my choices back by certified mail to the address listed in the order. Many folks also send a copy to the OCC for filing.

Negotiating a lease that has been pooled has to be quickly done in those 20 days.
Probably no more negotiating with the operator since the pooing is their final offer, but occasionally a third party is interested. The terms of the pooling are quite clear.

As far as negotiating a lease, the Mineral Help tab above is useful. There is an older book written by the founder of the National Association of Royalty Owners (NARO). “Look before you Lease” written by Jim Stafford. Attending classes and conventions put on by NARO and other royalty groups will give you tips and tools.

I highly recommend getting a good oil and gas attorney to review any draft lease as most draft leases are mostly in the favor of the lessee and not the mineral owner. Almost all of the clauses in a lease are negotiable. It just depends upon how much acreage you have and how well you can negotiate as to how good a lease you can get. Some Leasing Agents are easier to work with than others.


Thank you very much! I appreciate you sharing your knowledge.

I have another question if you don’t mind me asking. Years ago I had someone tell me that it was a waste of money to join the Oklahoma Mineral Registry as landmen typically do not use it. Because of that advice I have not joined it after that first time. However, since then we have had to reopen my grandmother’s will and redistribute some mineral rights as they were not recorded accurately at some point. I am wondering if it would be a good thing to do now to update things, at least for one year. What do you think?

Linda P. says hello!

No, no, no, a thousand times no. It is a sham & scams $1000s of dollars from people every year. Again, the only place to put your updated information is at the county clerk’s office. No, no, no. Don’t do it as you are tossing your money away to scam artists.

Todd is right. The county courthouse is where the land men go to find information. That is the official repository. Do not waste money on a for-profit group.