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Oil/Gas/Dewey County, OK Lease Offer

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Question
We were currently offered $250/net acre in Section 21 18W-18N for one year. They said they would up it to $350 if we did 2 years.  This is in Dewey County, OK.  I don't know what a "current" rate is right now. I do know that they've either drilled here or are fixing too.  3 years ago we leased it for $350/net acre which ended up being way too low because a couple months later they gave $800/net acre to a family member for the exact same land for 3 years. I just don't want to lease it for less than I should be getting.  Thanks.

Answer
I agree that $350 is a low offer in general, but then it's only for two years. You can do better if you agree to lease longer. I would shoot for $900/acre, 3 years, 3/16 royalty. There have been leases bought in this area recently for that amount. Valpoint Energy and Chesapeake Exploration are two of the companies that have filed leases of record in your section over the past six months.  

If they balk at $900/acre, remind them that Section 20 (adjacent to your 21) was force-pooled by Valpoint in January of this year for $900/acre and 3/16 royalty, indicating they were paying at least that much for leases prior to applying to force-pool the mineral owners they either couldn't find or couldn't reach an agreement to lease with.

Hope this helps you out.
Frederick M. "Mick" Scott CMM RPL
www.mineralhub.com
The Mineral Hub  

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Frederick M. Scott

Expertise

Oil and gas leasing, lease negotiations, how to best deal with the oil and gas companies or their representatives, buying/selling mineral rights, forced-pooling, correlative rights, deeds and conveyances, and "post-production" costs. I am most experienced with Oklahoma properties and laws, but am able to answer questions concerning other oil and gas producing states in many cases.

Experience

I am a Certified Professional Mineral Manager (CMM) certified by the National Association of Royalty Owners (NARO) in Tulsa, OK. I am also a Registered Professional Landman (RPL) with the American Association of Professional Landmen (AAPL). I have managed my family's oil and gas properties in Oklahoma for over 10 years and have dealt with many landmen, title analysts, attorneys and other oil and gas professionals in the process. I have written several articles which have appeared in various oil and gas industry magazines and newsletters. I have negotiated and drafted leases, prepared deeds, affidavits, and other legal instruments relating to my own minerals, as well as performed title, legal research, and curative work for same. I have acquired a good deal of knowledge on the subjects of oil and gas law, mineral appraisal, and landwork over the past ten years, and also worked as a professional landman and lease buyer for a time. I've seen the business from "both sides" and therefore feel confident I can help out most of the folks who ask questions in this forum.

Organizations
National Association of Royalty Owners (NARO); American Association of Professional Landmen (AAPL)

Publications
National Association of Royalty Owners "Action Report" (ROAR); NADOA Magazine, The Mineral Hub, Landman Magazine, and several royalty owner association group's newsletters.

Education/Credentials
Certified Mineral Manager (CMM), Registered Professional Landman (RPL)

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