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Oil/Gas/received oil and gas lease fair price?

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Question
NE/4 NW/4 and SW/4 NE/4 section 5, township 13N range 9E, Okfuskee County, Oklahoma, containing 80.00 acres, more or less
and
W/2 SW/4 section 18, Township 13N, Range 9E, Okfuskee County, Oklahoma, containing 80.00 acres , more or less
and
SE/4 SW/4 section 19, Township 13N, Range 9E, Okfuskee County, Oklahoma, containing 40.00 acres more or less.

I was mailed a lease agreement for 3 years, with a 2 year extension. If extension option is exercised, compensated 150% of the initial lease bonus. Lease bonus of $300 per net mineral acre paid. Royalty on production will be 1/8th of the oil and gas produced.
My question is: Is this fair? Low? or negotiable?
Thank you Eileen Davis

Answer
Probably is the current going rate, though I'd opt for a 3/16 royalty and perhaps less bonus, though the area is not that productive currently so 1/8 and more money might be more to your liking if you own more than just a few acres in each.

I would also opt for a straight 3-year lease with no extension. You can always tell them you'll be happy to lease again in three years at the then current rate (which may be higher than even 150% of their current offer.)

All leases are negotiable. You can add such things as a depth clause, no deductions clause, shut-in limitation clause etc. in most cases.

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

Oil/Gas

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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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