Oil/gas leases

I hold mineral rights in a property in wyoming—platte county. I am new to the oil/gas lease area and do not exactly understand lease offers. If a lease is offered as say, $500 for 3 years with royalty of 3/16, what exactly does this mean? Is the $500 paid only once for the three years, or is it per year? Does the 3/16 royalty mean 3/16 the value of the quantity of oil sold–e.g. 3/16 of $90/barrel, which is $16.88, or what? If I have rights to 640 acres, what does it mean to say for mineral rights acres? Thanks for the information. I have a lot to learn before I sign any lease arrangements. Don

Hi Ted: Thanks a bunch for your comments. Most appreciated. By the way, my middle name is Preston; following a custom dating back to the middle 1700’s, the eldest son in each Leach family is given the middle name Preston in honor of a great-great----? grandfather. thanks again for the reply.



Ted Preston said:
Don,

Most of the landmen who are leasing in Goshen and Platte Counties are using "paid-up" leases, which do exactly what you described: The mineral owner gets paid up front for the initial period of the lease. You will NOT receive yearly payments. Most of the leases contain a renewal provision so that you MAY get another payment to renew the lease when the initial term expires, IF the oil company wants to extend the lease term.

You seem to understand the royalty concept correctly as well, except that you will receive 3/16 of the value of the oil at the wellhead, which is typically lower than the commodity price per barrel you hear reported on the news. Depending on the wording in your lease, there may be other deductions from the oil value before your 3/16 is calculated.

Hi Ted: Thanks again for your response. If a firm has approval to drill or has applied for approval to drill on my land, is it advisable to get a lease with the driller, or is it better to obtain a lease from someone else. What are the advantages/disadvantages of each? Thanks again. Don Leach

This is a long shot, but I’m wondering if you are related to an Edward C. Leach, once of Galveston, TX?? I’m pretty sure he would be in his 80 or 90’s by now, if still alive.

Donald P. Leach said:

Hi Ted: Thanks a bunch for your comments. Most appreciated. By the way, my middle name is Preston; following a custom dating back to the middle 1700’s, the eldest son in each Leach family is given the middle name Preston in honor of a great-great----? grandfather. thanks again for the reply.



Polly Dross said:
This is a long shot, but I'm wondering if you are related to an Edward C. Leach, once of Galveston, TX?? I'm pretty sure he would be in his 80 or 90's by now, if still alive.

Donald P. Leach said:
Hi Ted: Thanks a bunch for your comments. Most appreciated. By the way, my middle name is Preston; following a custom dating back to the middle 1700's, the eldest son in each Leach family is given the middle name Preston in honor of a great-great----? grandfather. thanks again for the reply.

Just because someone has a fractional undivided interest in an oil and gas lease doesnt mean they can come on your land/surface carte blanche…what matters is who actually owns the surface rights in that case…be clear on that…damages and other considerations and such have to be in place first…