This is a lease in gross and not by the acre

Oil and Gas Leasing Help
1

I have never seen this phrase "...a lease in gross and not by the acre..". Can someone please interpret what it means. Here is the complete use of it in the lease.

This lease covers all of the land described above. This is a lease in gross and not by the acre and the bonus money paid shall be effective to cover all such lands irrespective of the number of acres contained therein, and the lands included within the terms of this lease are estimated to comprise 260 acres, whether they actually comprise more or less.

They are offering $225.00 per net mineral acre.

No mention of bonus payment otherwise.

2

It sounds like they cannot confirm how much acreage exists within the legal description and do not want to spend their money on a proper survey / title search. Shortcuts may create savings now, but be costly later. I would be leery, especially if anyone warrants title on that lease. I personally would not want to warrant anything when it comes to minerals, but especially not when someone is just arbitrarily guessing how many acres are contained within (net or gross). Again, it could be very costly later. Not every section or quarter section is square, I get that, but seriously it never fails that some people in this business just like to throw darts and do not care how or where they land. I think Vegas is much better suited for those types of gamblers!

3

Yep, not being able to warrant title to actual acreage could cause problems.

This reminds me of my last country acreage sale where the seller had received separate Deeds totaling 400+ acres from a divorce settlement. She had paid taxes on the property for several years. (Don't think, for one second, that the taxing authority will reimburse ALL your tax monies.)

A long story short - the land surveyed out to be 170+ acres. Just think what would have happened at the closing table once the buyer found out they were not getting 400+ acres ... misrepresentation!

Surveys do matter!

Good luck,

Pat

4

I received a contract that does not show any exact acres they are paying me for but a clause in the contact states that it will pay more if they discover more acres or we pay back to them if it is less. They told me that they do not like putting per acres pricing on campus nor act due to privacy. So my contract does not show number of acres they are leasing and how much per acre. Is this common or have a separate letter signed stating that he bro. Thanks, John R

5

BTW, an offer is not a Contract until after BOTH parties have signed - then it become a CONTRACT.

If this document is still an "offer", it's not too late to request 1.) a legal description of the property to be leased, and 2.) the amount of compensation to be paid.

With that said, I strongly encourage that you make sure that all you agree to is in writing because if there is ever a dispute over the terms of the lease, it will be extremely helpful to have the terms in writing to avoid confusion and to provide proof of what the parties' intentions were.

It's my guess that they don't want others to know these details of their offer. It might affect their future negotiations with other landowners. What do you care?

Question: How do they propose to "discover" more or less acres without a survey? And how much more will they pay if they discover more acreage? How much less for less acreage?

Nothing is common in contracts - it's offer and consideration. Just ask for what will make you feel comfortable with signing.

Good luck,

Pat

6

thank you Pat,

Just received another offer for $500. more .

7

I did get a reply that they do not like listing the price but if we want it they will display it. They are currently looking at the county to get land info and i asked him to place that on the contract. Seems agreeable but now I will see if he will raise the price $500 dollars per acre.

Thanks,

John

8

There's a lot more to signing a lease than $ signs. I'm not sure what you mean "they are currently looking at the county." Have you checked out this company? I hope you have done your research.

A year ago, I was approached by a potential lessee to lease my 50 acres with full mineral ownership. After a year of negotiating lease amendments, I finally decided that I couldn't "comfortably" live with the terms. So my final amendment was a "no drill" clause. It was already low, but they countered with a lower bonus and royalty. I told their landman that I was insulted.

So now, I'm the only one who is not in the pool.

Good luck,

Pat