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Landowner Rights Denied By Moratorium      NY: 10 Years, 4 Months | DRBC: 9 Years, 6 Months
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Plz. help! Is an auto renewal of the lease is in my benefit - new drill site.

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Clay

Hi,

The lease is $10/acre (not $20 as I first read).  They are now starting to drill in this area, so the testing must have shown some promise.  There is gas in this region- 20 miles east, power plant built to accommodate it.  These are pooling units.

Lease is @ years+ 3 years built in.  They can opt out after the 2 paid up front, but I can't.  The 3 year attachment is at a built in $10/ acre 12.5% minus expenses etc. also.  Then they wrote in another 3 years (if they want it) that benefits them the same way, at a slightly higher acreage rate of $60.

I am on the edge of the unit, and truly do think my small acreage isn't necessary for them to pool with other neighbors.

Everyone in the area is signing fast.  I don't want to look unattractive the the company, and realize they may not drill this far over for the first 2 years, especially when the "enviros from the west coast" get wind and head over to slow down the drilling.

Would I be shooting myself in the foot to ask for the 3 years to be an opt out for me as well, giving them the first 5 to strike oil/gas or not?  The landman of course says that I will look more attractive to them if I sign the full 8 years.  I know that all over people are signing an 8 or 10 year at $10 then $60-$75 for the last 3 years. 

I am consulting an attorney, but will likely only be able to make mild modifications or they'll write me off.  other areas are bracing for companies coming in in the future, I might be okay to hold off, but think I'll get on the train anyway.

I will (rather my 25 acres will)  look attractive if there are minerals here on my edge of the unit, so trying for a 5 rather than an 8 might be just fine?

Thanks for reading.  Input appreciated.

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bellbucci

"I will look more attractive to them"? You sound very worried that you'll lose out on the whole thing. If you're that worried, sign away.

Two years is better for you, five is okay, eight is not as good. If you want to sign for eight years, get something else, like additional royalty.


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Clay

Sure, it's a legitimate concern to "miss out" - depending on what they find in the area.  The "sign away" comment seemed a bit condescending.  I appreciate the input that shorter is better.

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bellbucci

... The "sign away" comment seemed a bit condescending....
You're probably right.;)

Keep reading up on things. The biggest thing you can do for your negotiating position is to track the activity in your area. Meaning well permits, e&s (erosion & sedimentation) permits for pads and pipelines, signed leases, plat maps, etc. Sources are the local courthouse, the state dep, operator's investor presentations, the local watering holes. This long thread may help.

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Clay

Thanks for the input and the thread.  I plan to reply with striking the clause that warrants marketable title for subsurface rights, another for preferential rights.  Not sure how that will go over.