Stefanie,
I don’t think they are “low balling” you. Daniels County is off the western edge of the Bakken play. There has been virtually no drilling yet and little leasing interest prior to Shale Exploration’s arrival. From that perspective $302 per acre is a fair offer for a five-year lease. At this point I don’t know if anyone is offering 3-year leases there. You didn’t mention what royalty amount they’re offering. That too makes a big difference if they’re “low balling.” In general offers within Daniels County; 1/8th (12.5%) is lowest, 1/6th (16.67%) is average, and 3/16th (18.75%) is top end.
However their 5 year + 5 year offer is a ten-year commitment on your part. They may choose not to renew it, so it might only run five years but you must still commit to allow ten years now. Then as EGL points out, Shale Exploration’s standard lease includes a paragraph giving them an extra year (the 365 days) beyond the stated five. You don’t want to allow that in a lease. As far as I know Shale won’t budge on the 5 year + 5 year option. However they should remove the extra 365 days provision if requested.
It will take several years to learn if the county can produce and Shale knows this. That is why they insist on the 5 year option to extend their lease. If the play gets hot they don’t want to renegotiate all these leases again. Nonetheless, I would discourage anyone from accepting a lease for ten years. It is too long. Though if their royalty offer is good, and Mom could use the cash, she has enough minerals to make this tempting. Seek out legal help and take your time. While I don’t know the attorney EGL recommends, I do know that his Plentywood law firm should be as well versed on current offers there, and oil & gas leases, as any firm you’ll find. Good luck.