Section 7 Leasing

I have been approached by 3 companies. The offer we are looking at right now looks like this:


- 3/16 royalty

-3 year lease, no 2 year option

-limited warranty clause (limits amount of bonus $$ paid and not attorney fees, mortgages, taxes...etc.

-pugh and depth clause

-limited deductions clause - can change to a 2 year shut in clause

I literally have zero idea what the last 2 mean?? Anyone out there who can educate me?

First of all, ask for 1/5th and 1/4th. Caddo probably only has 3/16ths right now but can't hurt to ask. You do not want the limited deductions clause. It will eat up your royalties in fees. Friend me with the blue icon at the upper left of my name and I will walk you through it. Some of the Caddo leases have been onerous to the mineral owner. You need to know where to change the terms.

Which township and range?

I asked for 1/5 with this company. He stated that his client had not given the authority to give a 1/5 royalty.