Hi and just an FYI we received our lease proposal for Township 20 North - Range 59 East - Section 4 - SW 1/4 at $400 an acre, 18.75% Royalty, 3 years. Right now I want to take my time to understand the lease terms before signing. The mineral rights were passed down in the family from my grandparents. I didn’t know we had anything until we got contacted by the Savage law firm in Sidney about 16 months ago. Since my mother passed away in 1994 outside of Montana without a will, I was told and proceeded to complete the probate in Montana. Now with the lease, do I contact the Savage law firm to review the lease before signing or had they been acting on behalf of the oil concerns? Through this forum and other internet searches, I have read a lot - but now that it is getting close I want to make sure I do this correctly. I have a paper named as “Mineral Deed of Distribution” for my mother as deceased. Is this enough? Do I need to do more?
Norman:
It is entirely up to you if you decide to have this law firm review the lease in regards to its content. I am not totally familiar with this area in Richland County but you can go to the “Eser.org” website and plug in your T/R/S then view your area and any production near your area. I say this in order for you to view the nearest producing wells near your area. I’m going to guess that $400/acre might be a bit low as activity is increasing steadily in the Richland County area. I would negotiate for 20% as this is becoming the going royalty for numerous newer leases. The 3 years is good but I would not consider any lease extension clauses in your lease. If you will click on “Groups” above then scroll to Montana then to Richland County, you might pick up on some current lease bonuses for this County. If the company wants to deliver payment via a bank draft, you need to be aware that the element of “trust” must be involved. One way to protect yourself from being “cold” drafted, is to let your bank hold the signed notarized copy of the lease along with the bank draft thus acting as a collection agent. When the money arrives at the bank, then the signed/notarized copy of the lease will be mailed to the company. This is completely up to you but if the signed/notarized lease is mailed back, they can record the lease and never honor the bank draft. I have done it both ways and luckily never had a problem but I always research the track record of the company that I’m dealing with. Good luck in your negotiations.
Charles - Thank you for your reply. Will try to negotiate a bit higher and see what happens. Thanks again.