I recently renewed a 3 year lease with a 2 year option. In the meantime, I have been approached by another party wanting to top lease that property. Why would a mineral interest owner want to go into such an agreement when they would be bound to that bonus for a time period beyond the current lease term and bonus offers could go up during that time? Any thought on this will be appreciated!
This is a question that has been asked a number of times, I would say use the search function, top right of the page, and you will probably learn all you need to know if not more than you want to know.
Thank you, R W for your reply. Could it be that the lease option I signed has not been recorded at the county courthouse yet (even though it went into effect about a month ago) and the second party knows this?
Your instincts are on point about not committing to a future bonus when market prices can fluctuate. Generally it is better for the mineral owner not to commit to future bonuses or options. If the company wanting to top lease you will pay the bonus now and make it non-refundable, that's a bird in your hand vs two in the bush, but the company almost certainly won't agree to that. Mineral owners should be wary of entering into agreements where the mineral owner is obligated to do something but the other party is not.
Sheri, they might not ever record an option.
For what it is worth, the State of Texas will not allow Top Leasing where they own the minerals. That is a pretty good coattail to ride.