Negotiating our lease


#1

My sister and I have mineral rights in Divide County ND. We recently received a lease offer from Diamond Resources for Continental. Previous lease (2014) was $1000 per acre for a 3 year lease. Current offer is $150 per acre for a 5 year lease. This seems a pretty drastic change. Is this typical of current leases in ND? I'm tempted to tell them thanks but no thanks.


#2

Hi Lynday,

that is a "low ball" offer for sure. Diamond Resources is trying to go super low below market value. Hold on and you will see lease offers going up and terms shorten. All the best.


#3

Thank you. I appreciate the quick response. We are planning to call the landman tomorrow and this helps. I will be polite, but thought about asking if they had a typo and left off a zero.


#4

I have a similar story. . . I leased about a year ago with Liberty Resources at $500/acre after my lease expired with Continental. This is in Frederick Twnshp. I negotiated a 3 year lease at 20% with an option at $600 at the end of 3 years. In hindsight, that may have been a mistake on my part, but it seemed like a good idea at the time. Liberty Resources also allowed me to amend the Producers 88 with about 30 of my own contract modifications. I was assisted by the O&G people at First International Bank and Trust which I do not regret in any way. Yes, the offer paled in comparison to the previous Continental lease, but I would not worry too much about the bonus if the royalty percentage is good and you protect yourself with strong lease contract provisions. Liberty Resources was willing to do that, which tells me something positive about their business model. Hope this helps, even though I just saw your post.