Section 32Township 2 South Range 4 West--Stephens County--Lease Renewal Time

In 2012 Bearcat gave us a royalty of 3/16 Bonus of 1,000 per net acre 3 year renewal option (for them).

Bearcat (and others) now reaching out to us (various family member with separate interests).

One family member accepted 3/16, $1,200 per net acre, 3 year lease with a two year option to renew. We are in early stages of negotiation with Bearcat and have received "contact us" solicitations from other companies.

Other companies: Aegis/Mountain Front Resources/America Minerals and even an earlier very lowball proposal from Bearcat.

We are not interested in Selling (though Mountain Front offered $3,500 per net acre with the usual "call us if you have received a higher offer and we will beat it" language).

In my conversation last week with Bearcat the rep. said "yes oil has been discovered but there is no guarantee that the oil company will start extracting it any time soon". He said even if we got a higher dollar lease deal in 2012 we must note that oil prices are (now) much lower.

I told him I have just started my due diligence before agreeing to anything . This Board was immensely helpful to us in 2012 (hard to know much sitting here in The Garden State of New Jersey!).

Any random thoughts/suggestions about this posting would of course again be deeply appreciated.



Michael, there is nothing that says you have to lease now. If it is a matter of wanting or needing the bonus money now then I would advise negotiating for the best deal in terms of royalty % and bonus amount. If cash now is not a big concern I would wait a while and see if oil prices and lease offers improve in the future. Once drilling is actually planned the offers are bound to go up. Whatever you decide I would advise against taking the 2 year option to renew, that just locks you into todays terms for 5 years. If you do decide to lease check back on the Stephens forum if you need any help with important clauses that should be in the lease for your benefit.

Since we are all connected electronically you are as close to the action in New Jersey as I am in Texas.

Michael thank you very much for your feedback. We absolutely do not need lease $$ now.

I guess my follow-up question is because the 2012 Lease expires on July 31st by not renewing before then are there any negative considerations other than the fluctuation/volatility of oil prices? If hypothetically we decide to renew 6-12 months from now after the Lease expires do we have the same options as if we had renewed before July 31st?

And I plan my 15th trip to the Lonestar State (Dallas area) in November!!!

Thanks again.

In my experience, there are no negative implications that not leasing now would have, unless the price of oil drops again or if a bad well comes online in the vicinity (or a great well for that matter that is just far enough to adversely affect the likelihood of drilling in the near term).

I'm not too familiar with the section off hand, but, in general, those would be the main factors that would have an adverse effect on the prices you should expect on a NEW lease. Not to be technical by any means, but for the sake of clarification, you will not be "renewing" the lease but rather negotiating a completely new contract with the freedom on your end to shop it around and ask for a completely new lease (with new terms).

I wouldn't consider taking ANY opinions for extended leases in their (the companies) favor. In three years a lot can happen and has this last three. Just my thinking but it might be worth a lot more then and if not they wouldn't exercise their option anyway.

Linda, Adam, Michael thanks again for your guidance. I will probably start calling(back) Bearcat and perhaps at least one other company in the days ahead and will keep everyone updated on the results and process. But thanks again.

My current lease agreement is expiring soon also with the option to renew but I'm not renewing. I want to be FP when they come knockin' next time. Should I let them know or just keep turning down everything or not respond at all? How's the FP game played? Hutch, anyone?

Mmmmmm, that option to renew is “their” option, not “your” option. Unless you just got an outrageous deal, I’d be surprised if they don’t renew it.

Best I’ve had yet so let em’ renew…then when that runs out, what’s the FP game Rick?

Let me rephrase bonus yet but with their lease terms. They wouldn't budge on the lease clauses. So if they decide to renew...after that lease expires (current) when they come knockin' again, if I want to be FP should I just cut to the chase and let them know, just keep denying every offer dickering with them or just don't reply at all. I know all you experts are thinking, just go back and read previous posts, this has already been covered but guess what...I don't have time. Anyone?

Lets say you leased in Oct 2012 with a 3/2opt lease for 10 NMA @ $500 an acre. All they have to do is send you a check for $5K prior to the end to exercise that option. (they will also file at the county) Their renewal will be the exact same terms in the previous lease, you already agreed to that in your current lease. As far as not budging on the clauses? Sometimes people have some very unrealistic expectations in leasing. But if you ended up with a lease with an option clause, I strongly suspect there was far more negotiation to your favor available.

If they don't and it expires then you can lease to someone else or wait to be force pooled. Basically if you are not happy with the terms don't lease. You may or may not get better terms than the "election" options if force pooled so keep that in mind.

All of the ins and outs of pooling is a long and complicated subject. There is at least one book on the subject (How to Survive forced pooling in Oklahoma) and several more with info on it.

Here is what the OCC has to say about it:

Unless you are unleased AND there is a pooling application in process you have plenty of time to read and research. Just make sure the data you are reading is specific to Oklahoma Forced Pooling.

I don't mind answering a specific question on forced pooing. But I am limited on time as well and I'm not willing to spend a few hours addressing the top issues and how all of the different scenario could play out. There are many groups of people that have different needs they may want to consider.

Feel free to friend me and we can exchange info to talk about it in a phone call. Or heck, you are in OKC. We can talk about it over an appetizer and/or beverage.

As far as the clauses I just wanted the basic important stuff like no top lease, shut-in gas limitations, no title warrant, no post production deductions & depth but they were like "no way, take it or leave it". I think I know what I'll do when the time comes now. I don't need the money either way. I retired financially independent at 40. I'm 51 now and just recently inherited the mineral rights and have learned quite a bit from this forum thanks to the one's in the know like you Rick, M. Barnes, Hutch and a few others like even ole miss Lynzy from Lynzy (pun intended...I'm an old rocker & Skynyrd fan Linda). I just don't have the time to study all the ins and outs of this stuff and even though I'm retired, I feel like I work harder and am busier than I was when I was working hahaha. Thanks again to you all.

There is always the chance by not renewing when the lease is up is that the Company desiring to lease from you re-thinks the opportunities in the section where you own rights and decides that another area might be more promising and lessens their current offer. I know from experience that a few sections were fetching 800 per acre a few months ago and now are only getting 500, something to think about.

Kenneth, your clauses are quite reasonable and intelligent. When they tell me "take it or leave it, I leave it"

Considering two Offers.

#1 From Bearcat 1,500 per net acre 3/16 Royalty, 3 years, no option.

#2 From Recon-Resources, 2,000 per net acre 3/16 royalty, no option.

As originally posted, we have a 3 year Lease (expiring on July 31st) with/through Bearcat and Mr. Baker has been a delight to speak to though he has made it clear Offer #1 above is the Final Offer.

Recon-Resources through Mr.Houlik has also been quite pleasant and was very flexible so far in extending Offer #2.It seems they are a bit newer/smaller than Bearcat though I do not see if that makes a difference if the Lease Agreement is appropriately worded and the check clears!

Also I'm a bit unclear about under what circumstances the royalty kicks-in and/or whether I would be assuming any share of the drilling or other costs.

Other obvious questions: any feedback concerning the companies and/or the specifics of the two proposals will be greatly appreciated as we'd like to sign the paperwork in the next 10 days or so (but won't do so if there are strong indications that even 2,000, 3/16 is way-too-lowball).

Thank y'all!!

Michael, it was a pleasure speaking with you as well. Which offer you accept is up to you and I wish you the best either way you go. Either way three years from now we will be talking again, if not sooner. If you're ever down Southern Oklahoma way, look me up. I'd be glad to show you the sights, maybe even find some steps to run up. Take care

Ted thanks for the feedback here and for all the time you put in with me as we solved the problems of the world!!!

PS For the "Rocky" steps at the Philly Art Museum they put in a special chair lift for me! Diana's sis and brother-in-law had a great time here on their first visit to "Yankee" country. Be well.

Michael A,

Make sure you get a very good lease from whomever you choose. No post-production charges, depth clause, no warranty of title, commencement of drilling clause, no top lease clause, good Exhibit A, etc. Come back if you need help. You will only get royalty if the well is productive. You will get your bonus within 30-45 days. Be sure and clarify that. Make SURE that you are only a royalty owner, not a working interest owner. I doubt they are offering that, but it is not for the uninformed. It does not matter whom you lease with since both of those companies are leasing for someone else. The operator will do the drilling.

Mr. Barnes thank you for this.

As we close in on finalizing our decision I fully intended to be certain that we will be under no obligation for costs/charges whether in the absolute or to be offset (and possibly exceed) any future royalty. I will be reading the Contract very closely of course.

I hate to keep posting "one more question"--my guess is there may in fact be 3 more!!--but isn't there an Oversight Company to which royalty Owners may subscribe and this Company will then keep all Subscriber/Owners apprised of any significant developments on the site?

I vaguely remember this possible option exists for those of us far away from the great State of Oklahoma.

Thanks as always.

Nope....not really....they will not inform you. You have to hunt the info down.

You can subscribe to DrillingInfo for a fee, but you can get the info for free from the Oklahoma Corporation Commission when they post it. Friend me and I will walk you through it.