Our family has been offered from Bearcat $502 bonus at 3/16 or $202 at 1/5. We own about 120 acres minerals. Bearcat has not showed us a true lease contract yet and say they are reluctant to do so until all the family who are shareholders in the minerals are in agreement. Seems a bit odd. How can we negotiate terms, including any provisions such as a "Pugh clause" etc if we can't see what they are offering? Seems like the offer is pretty standard for this area at this time. apparently Continental Resources is wanting to determine how far S.E. the Springer shale extends. Any thoughts are appreciated. I have knowkedge of what happens in the well while drilling and completing but no experience in the front end regarding the legal implications of leasing the minerals.
Typically they offer a standard form lease anyway, and it will be up to you to tell them you want an addendum with Pugh Clause, Pricing Clause, Depth Clause, Shut-in Clause, etc. If their standard lease "warrants title", I would strike that language. If it gives them an option to renew the lease, I would also strike that language as well. Personally, although you can give a verbal agreement, you should say you cannot agree to final terms until you see the lease, and until an addendum is added with your required clauses. Also, I wouldn't hesitate to counter on the amount of the bonus money being offered, or to request a 1/4 lease with little or no bonus.
A better way to do this is to prepare your own Exhibit A, which will be attached to, and made a part of, any lease you sign. It's worded so that its terms supercede any conflicting terms in the lease, and it covers such things as Pugh and Depth clauses. I believe you'll find a model Exhibit A for download at the NARO (National Association of Royalty Owners) website (www.naro.org). If that doesn't work for you, give them a phone call, and if that still doesn't work, post again here.
I'm a landman contracted with bearcat and I don't have a problem sending someone a "sample" lease at all. The sample lease is an exact form that would be used if you did decide to lease, only the real lease would contain your name, legal description etc. I personally don't mind sending a copy of the continental approved clauses either. I don't know who you are working with but it is not an unreasonable request that you are making.
Ted
Thanks for your response. My sentiments exactly! One of my family members in spearheading this. I will let him know.
James, what section are we talking about here. I have a few sections in 4s-1e and would be more than happy to help you guys out. I'm a pretty easy guy to work with. Let me know either here or send me a friend request and we could talk about it there
Section 6 SW 1/4
I've now also received an offer from Bearcat in this township (section 3, in our case). They've offered $400 @ 3/16, $200 @ 1/5. So I'm also interested in what's going on here, and in learning about any other offers. I'll let them know I'm interested in principle, and will send them my Exhibit A. I'll also take a look on DrillingInfo to see what I can learn. James, has there been any progress on the lease possibility you mentioned above?
Our family signed our agreements with Bearcat early in December. No response back yet as to their acceptance. We came to an agreement on terms, but as you know, they can back out at anytime before the completed deal. the more acreage you have the better opportunity. We have almost 1/4 section so we think that helped.
Do you mind telling us the lease bonus you agreed on?
BTW, you mentioned early on that you had trouble getting a sample lease. I got that about 90 minutes after I made the request. It occurs to me that the difference might be this: As I always do, I asked for a blank copy of the lease form they were using. If you made them think you were asking for a filled-in, ready-to-sign lease, that might account for the delay. Just my 2c.
FWIW, I agreed to terms with Bearcat, including agreement on the clauses in the Exhibit A, which they had to take to Continental for approval. Then they sent me a lease with a substituted Exhibit A that didn't include most of what was agreed to. When I balked, Continental said that in this climate they wouldn't agree to anything else. I declined, particularly as they refused a Liability clause indemnifying me if they mishandle the site. I'm not interested in paying for the next Superfund site -- or in warranting title, for that matter, which we never do. YMMV.