Oil and Gas Mineral Contracts?

We have two different landmen offering contracts one @ 25.00 per acre the other 35.00 & 1/6 on total. I understand there are about 5 different companies trying to get leases, so how would I find out? One guy said his outfit has already drilled a pilot well above our property so he said they are a year and a half ahead of the rest.

Also is it normal for the original drilling cost to come out our 1/6?

Thanks for any info,



It is not normal at all for the landowner to pay for any of the costs of drilling under an oil and gas lease. You may have been presented with something other than a lease. A typical O&G lease pays some agreed upon bonus upon execution, a yearly rental if a well is not drilled and productive and a royalty share of the production. While many leases will attempt to charge the lessor for some portion of post production costs, you should not sign anything that obligates you to a portion of the drilling cost without legal advice.



I agree with Ed. Also, what county and state are you in? Those offers seem awfully low if there have been pilot wells in the area that are proven wells. How much acreage you have could be a factor. Make sure you draft a lease or include an addendum that will protect your interests.


Sean Bellomy