I have been negotiating with L3 Resources on a proposed lease of mineral rights for the last couple of months, 17-10N-9W. Had been hoping for more offers but none had been recieved. We had come to terms with L3 at $1000bonus, 3/16 royalty but have not recieved a final contract. Today I did recieve another offer from Summit Land Co. for a larger bonus by about $500 per acre, 3/16 royalty. First question, is Summit Land Co. a well known and reputable company? I have checked them out on line and see nothing suspicious. But it’s a new name to me. Second, would it be ethical at this point to consider this new offer? I am negotiating for several members of my family so feel I have an obligation to do the best that I can. But I don’t want to be a jerk either. Do I go back to L3 and tell them I have a higher offer? Give them a chance to meet or exceed?
What wells, if any, have been drilled in this area? The only one I know of was a natural gas well back in the 60’s. That was closed down after a short run.
Sorry to say, I do not have much experience dealing with the ins and outs of mineral rights. Thanks in advance for any advice!!
I can’t speak for Summit’s reputation directly, but on the question of ethics, your responsibility would be to negotiate in good faith while also ensuring your family gets the best deal available. It isn’t bad form to let L3 know you’ve received a higher offer and ask if they want to match or improve. That way, you’re being transparent with both sides while protecting your family’s interests. And remember, bonus and royalty are only two of many terms in a lease that can be negotiated.
That being said - every mineral title and lease situation can have unique issues. It would be wise to seek assistance from a qualified Oklahoma oil and gas attorney to review your circumstances and ensure that the lease terms protect your interests.
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On Summit’s offer, there is a term I am unfamiliar with. We know to request no 2 yr extension but this offer has the term “2 year option to extend paid at 125%”. What does that mean, exactly?
This means that Summit’s client could extend the lease for an additional two years by paying 125% of the bonus amount they are paying for the lease. In other words, if they leased the interest at $1000 an acre (for round number purposes), then they would pay you 1,250 to extend the lease for two years.