Our proposed lease in Marion County is offering $120.00 per month, per acre, annually if drilling has not commenced. Is this the norm? Should it be more? Dealing with Arsenal Resources but nothing is signed yet. Two tracts, one is 33 acres and one is 77 acres. Appreciate any help with this.
That language sounds a bit unusual. Most leases these days are a paid up lease where the agent offers a per acre bonus for three to five years. Never hand over a lease without getting a cashier’s check up front. It would be wise to get legal counsel and get better wording. Even in the old days with delay rental leases they were paid annually. Caused all sorts of headaches. The clauses in the lease are critical and the draft lease is rarely in the mineral owner’s favor.
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We’ve leased several mineral rights on/off for 40 years. But never heard of a monthly lease. Only by the acre for a bonus amount for 3-5 years and a % cut of the oil/gas if they hit. For instance, we just leased a 10 acre MR for $1200 an acre bonus for 3 years with an additional 2 year option at 2x original bonus. If o were you I’d most definitely have an oil lease lawyer look at what they’ve offered before signing anything. There are unethical landmen out there that offer one thing to get your lease then sell it to oil company for higher amount.
@DebbieSS - I personally would never accept a “Delay Rental” lease. Most modern oil and gas leases are “Paid-Up” for a fixed primary term, usually five years. With a Paid-Up lease, you receive your entire lease bonus upfront, covering the full primary term, whether or not the operator drills during that period.
A “Delay Rental” lease, on the other hand, pays the bonus in yearly installments. The operator must pay the annual delay rental each year to keep the lease active if no drilling occurs. However, if the operator decides to drill in, say, the third year, the lease moves into the producing phase — and you forfeit the remaining two years of delay rental payments.
In short, a Delay Rental lease can cost you part of your bonus if drilling occurs before the end of the primary term, whereas a Paid-Up lease guarantees you full payment regardless of when drilling begins.
Thank you so much. Unfortunately I have some experience with an unscrupulous landman. Let’s face it, they aren’t going to look our for anyone other than the company.
Thanks for your input. I’m learning so much from this forum. I agree that we may need to consult with an attorney.
@DebbieSS- West Virginia oil and Gas Attorney or a Petroleum Mineral Advisor. You can search Google for Petroleum Mineral advisors in Morgantown, WV. This group has oil and gas attorneys for WV information they can provide.