Hasn't anyone figured out a legal way to do something about a mineral rights lease that is old and does not have a Pugh Clause?
4 tracks tied up by 2 producing tracks.
Is unfair for future generations to be to be stuck without a way to at least re-negotiate the lease.
Hardeman County, TX
I don't think you are going to get an oil co to renegotiate unless they want/need something else from you. I think the best you can do is try not to repeat any mistake you can identify, in your future dealings. Drive the hardest bargain you can.
I agree with Mr. Kennedy in that renegotiation of the lease will be slim to none unless you’re lucky and hold something that the oil company needs and its a very slim possibility that they might bargin with you.
There is an implied obligation to fully develop the properties. If you have the wherewithal, hire an attorney and file suit.
As to future generations being stuck by what the previous generations did, well, I am sure that your ancestors appreciated the oil money.
Our future generations will pay the bill for what our generation has done, as well. It is the way of the world, it seems - at least since the Industrial Revolution.
BTW, they are called "tracts" not "tracks" like a bunny would make or a train rides on.
Do you agree when there are several tracts in a lease that you can ask for a separate lease for each tract so they can't tie it all together? and if a lease was already negotiated with several tracts...when renewal comes up can I then say no unless you want to give me a separate lease for each tract then we can continue to business? hope someone can answer...I am a newbie and trying to learn very quickly the mistakes not to make..thanks
Buddy Cotten said:
There is an implied obligation to fully develop the properties. If you have the wherewithal, hire an attorney and file suit.
As to future generations being stuck by what the previous generations did, well, I am sure that your ancestors appreciated the oil money.
Our future generations will pay the bill for what our generation has done, as well. It is the way of the world, it seems - at least since the Industrial Revolution.
BTW, they are called "tracts" not "tracks" like a bunny would make or a train rides on.
Best,
Buddy Cotten
Elizabeth:
When the leases expire, new leases can be negotiated in terms that fit your needs. Make sure the leases did not contain "extension" clauses. If extension clauses are contained in the leases, you may be committed to the original lease terms.
thanks..I will look and hope their are no extensions....do you mean a top lease when you say extension? I try not to do that so I can renegotiate after 3 years just in case...but maybe that is not to my advantage? They say keep stuff leased..?
Elizabeth:
An extension is not a top lease. A top lease is where a company leases minerals while the mnerals are currently under lease. In the case of top leases, Company A will lease your minerals (which are under a current lease) and pay a % down of the negotiated price whereas the balance will be paid after the current lease expires. If Company B (who holds the current lease) drills prior to the lease expiration, then Company A loses the downpayment. In most cases, companies tend to top lease within a 6 mo. window of the expiration of a lease and they feel fairly sure that no drilling activity will occur prior to the expiration date. In regards to your statement, "keep stuff leased", that is not always the ideal way to handle your minerals. Sometimes, it is better to let a lease expire and hold out to see the performance of nearby wells as a good well or wells only strenthens your negotiation power for more bonus money and better % royalty. Again, this is my opinion and the way I conduct my own business. Good luck on your leasing endeavors.
thanks....good info on top lease and and I have alot to learn regarding whether to lease or not..trying to read all I can in meantime.
charles s mallory said:
Elizabeth:
An extension is not a top lease. A top lease is where a company leases minerals while the mnerals are currently under lease. In the case of top leases, Company A will lease your minerals (which are under a current lease) and pay a % down of the negotiated price whereas the balance will be paid after the current lease expires. If Company B (who holds the current lease) drills prior to the lease expiration, then Company A loses the downpayment. In most cases, companies tend to top lease within a 6 mo. window of the expiration of a lease and they feel fairly sure that no drilling activity will occur prior to the expiration date. In regards to your statement, "keep stuff leased", that is not always the ideal way to handle your minerals. Sometimes, it is better to let a lease expire and hold out to see the performance of nearby wells as a good well or wells only strenthens your negotiation power for more bonus money and better % royalty. Again, this is my opinion and the way I conduct my own business. Good luck on your leasing endeavors.
Elizabeth:
The main thing to remember is don't get in a hurry in regards to leasing. If your mineral acreage is in a good area they will come to you without your having to contact anyone. Weigh each offer individually, consider the company leasing your minerals, what kind of track record have they had with mineral owners and do they have new wells in the area thus telling you that they are serious about developing the area and not to flip the minerals for a profit in the future. Do your homework and learn all you can in regards to the techniques of leasing so you don't become a victim of another's money game.
thanks Charles. good info...however, I think I already gave extensions on some Stephens rights so probably lost nmoey on that deal. Again I don't know what the extension means except to continue the lease for another 3 years....is that a bad thing? Knowing it was Stephens and there is a lot going on there I should have not agreed to extend but I already mailed it....oh well, you all are teaching me a lot and I need all the help I can get...thanks.
Elizabeth,
You are right. Having an extension give the oil company the right to take the "option" IF they choose to do so.
The ones I have seen are 3 year with a 2 year option for the same price the 3 years was. Say you leased at $500. At the end of the 3 years they have the option to lease it again for another 2 years. If the mineral rights in the area are now worth $1000 per acre, they will renew for $500. If they are worth $50 an acre they will not exercise the option. Then they will come back and offer you $50.
I don't see any advantage for the owner and too many advantages for the oil company.
Agree with Rick. The option is totally for the oil company advantage. However, at first blush it does look good because we simply automatic think, ha, I'll get the signing bonus again if they don't hurry up and drill. Well no, as Rick says, they will extend if it is to their advantage and not renew if it isn't. Absolutely no value in having an option for a mineral owner.
Wilson
don't see where I said tracks anywhere, you must have me confused with someone else.
Elizabeth Kirkpatrick said:
Do you agree when there are several tracts in a lease that you can ask for a separate lease for each tract so they can't tie it all together? and if a lease was already negotiated with several tracts...when renewal comes up can I then say no unless you want to give me a separate lease for each tract then we can continue to business? hope someone can answer...I am a newbie and trying to learn very quickly the mistakes not to make..thanks
Buddy Cotten said:There is an implied obligation to fully develop the properties. If you have the wherewithal, hire an attorney and file suit.
As to future generations being stuck by what the previous generations did, well, I am sure that your ancestors appreciated the oil money.
Our future generations will pay the bill for what our generation has done, as well. It is the way of the world, it seems - at least since the Industrial Revolution.
BTW, they are called "tracts" not "tracks" like a bunny would make or a train rides on.
Best,
Buddy Cotten
Elizabeth:
I believe Buddy was referring to the original post, not on yours.
Elizabeth Kirkpatrick said:
don't see where I said tracks anywhere, you must have me confused with someone else.
Elizabeth Kirkpatrick said:Do you agree when there are several tracts in a lease that you can ask for a separate lease for each tract so they can't tie it all together? and if a lease was already negotiated with several tracts...when renewal comes up can I then say no unless you want to give me a separate lease for each tract then we can continue to business? hope someone can answer...I am a newbie and trying to learn very quickly the mistakes not to make..thanks
Buddy Cotten said:There is an implied obligation to fully develop the properties. If you have the wherewithal, hire an attorney and file suit.
As to future generations being stuck by what the previous generations did, well, I am sure that your ancestors appreciated the oil money.
Our future generations will pay the bill for what our generation has done, as well. It is the way of the world, it seems - at least since the Industrial Revolution.
BTW, they are called "tracts" not "tracks" like a bunny would make or a train rides on.
Best,
Buddy Cotten