If you already have leases at 1/5 RI from Company A, then you get another lease a year later from Company A but it’s only for 3/16 RI. Shouldn’t they just make things easier and make it the same RI % but just lower the bonus a little bit ?
How am to be ensured that the RI pay dept gets this correct ?. It seems like it’s just more of a pain to keep up with it.
Hi DP. We all like to see where the leasing activity is, if you don’t mind. I’d ask the Landman that question. But Best Wishes on getting the best deal!
There will be people on this site that know more than me. Any of the probably 40 leases I have signed over 40 years, all have an ending date. Common is three years. Also, most of the leases have a production clause. If the well is drilled, and production starts, and then ends, the lease expries at some date after no production. I have a lease for an old vertical well stopped producing, and I had to produce the lease, that was over 40 years old, that showed when that well stopped producing, the lease ended. A very large production company drilled a new well and lateral on that section, we hired an attorney that sent a letter with the lease, and the production company then had to re-lease my mineral acres. All leasess in Oklahoma are filed in the country court house, and my thinking is for people to research old leases for a non-production clause.
If you have an active lease, then it will stay active under its terms until it expires from the primary term or secondary term. If you get another lease offer, then double check the terms of the first lease as it may be for a different horizon if you had a depth clause on the first lease. It is common for lease offers to start at 1/8th or 3/16th, but wise to try to negotiate upwards for a higher royalty (and lower bonus).
The Division Order analyst will use the lease that goes with the well that is drilled for the horizons covered by the lease. Always keep a copy of your lease and be ready to check the net mineral acres, the spacing acres and the royalty when you get the Division Order.
Lease rates and bonus can vary by location even within a county and over time depending on oil and gas prices. Oil and gas companies frequently deal with differing royalty rates even for the same well. However, you can negotiate the terms of the offer. There is a lot of difference in royalty income between 3/16 and 1/5.