Question about Oil and Gas lease Anderson County

Oil and Gas Leasing Help
1

As stated earlier, I am having to do some fast homework. This forum is great. My first question was answered before the day was over. Now, I have in hand another lease from Anderson County. Basically, I want to know if this is about standard. This company wants to drill to a depth down to 3,000 ft. He says they are working on a gas project only. He told me via phone call that "any other company that wanted to come in and drill behind them deeper" it would be open for them. That's vague open for them or me? I can't find in the lease anything that states what he said. 14% royalty gas I'm guessing. $200 dollars a net acre and finally a 2year option to extend for an additional $225 per net acre bonus.

Now, that being said at the bottom there is null and void after 30 days starting Jan15, 2012. Why a deadline is that standard to push on something like this. Another thing, it is on a tract described as 126.4 + or - being 3 acres out of the Robert Erwin League and 123.4 acres out of the Joseph Crawford Survey. He is wanting to lease only 3.009521 net mineral out the Anderson county which of course is "didly" but if I do NOT sign will that mean since it is so few acreage would they drill anyway and just horizonally drill if wanted. I know I'm a little fish in the sea on this one but will the other acreage overrule me in not signing. #15 in the lease reads"in the event that Lessor owns additional mineral acreage other than those described in the aforementioned oil, gas, and mineral lease, a subsequent lease on that acreage may be obtained by the lessee by payment of additional agreed upon bonus payments with and additional agreed upon lease between Lessor and Lessee" I have minerals all through out the area what does this mean? Could they hold the rights if just deal to 3,000 ft and I can't find in the lease that another drilling company could come behind them and it would be mine. Also, with just this small amount of acreage I would not need a separate contract because it is on two different surverys. Likely mine would probably be on one or the other. I should be receiving a phone call from tyler at 6:00 tonight and thoughts, pointers, ideas would be greatly appreciated.

2

Kenneth,

Only the language in the lease matters once you execute it. I appears to me that you may be tying up all your acreage under a unilateral option agreement.

You need to know a lot more about the intent of the operator and what is happening in your immediate area before going ahead with a lease. A proper contract may indicate more than one parcel but on the other hand you can limit a contract to only one parcel and most certainly strike the condition you quoted above. You have a sharp eye to recognize a potential flaw in the lease proposal.

Let Tyler know that you need to know a lot more about the deal because his or her words don't seem to be in the contract language. Perhaps he can tell you where the depth limit provision is in the language.

I will request you as a Friend with some contact information and, with your permission, find out what is going on around your parcels. No Charge.