Hello all. I receive a “Paid Up Oil, Gas and Mineral Lease. 3 year term, 10k bonus and 25% royalty. Have not read about a Paid Up lease before. From what I can find, a paid-up lease means I wouldn’t receive any royalties. Is that correct? If that is the case, why list out a royalty term?
Also, they are giving me the option of selling my interest completely. Has anyone done this before? What would you base your asking price on?
TIA!
Emily
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Please consider an oil and gas attorney to negotiate for you. Those oil and gas companies sure do an about face when they know a certified oil and gas attorney is involved
I know you’re right - I’m ripping through as many educational videos as I can find on the NARO website, and somewhere heard that a ‘paid up lease’ can be a good or bad thing depending on the circumstances.
A paid-up lease means that the bonus is for the entire primary term, usually three years. Traditionally leases had a bonus plus a delay rental payment due at the end of each year if the oil company had not drilled a well. Delay rental was usually $1 per acre. If the oil company failed to pay the delay rental, or paid late, then the lease expired. All of the lease I see are paid-up.
And royalties will be paid whether it is a lease with delay rentals or a paid-up lease.