AboutFrederick M. Scott CMM Expertise I can answer questions about oil and gas leasing, and give suggestions on how to respond and what to expect when contacted by an oil company or their representative offering to lease your minerals. I can answer questions about selling or buying minerals, and can provide advice that will help ensure you get a fair deal. I can also answer questions concerning forced-pooling, correlative rights, deeds and conveyances, and the infamous "post-production" costs that are often deducted from royalty checks. 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 in Tulsa, OK) and have managed my own oil and gas properties in Oklahoma for over 10 years and have dealt with many landmen, attorneys, and other oil and gas professionals in the process of doing so. I am also a member of several professional associations and have written articles of interest to royalty owners which have appeared in several industry publications. I have prepared deeds and done title work and curative for my own minerals; and have acquired a good deal of knowledge on the subject of oil and gas law and landwork in general in the process.
Question an oil company is wanting to lease the mineral rights for 1 acre of land we have in mississippi. they have already leased land from 4 people whose land join mine. but everyone else had the offer (and took it) to lease several acres of their land. i was told by someone that since they are only needing 1 acre of my 120 that i might have some negotating room. they offered me 100 for a five year lease with 3/16 royalties. what is your opinion on the offer and do you think i can negotiate with them. thanks,chris
Answer Chris, actually with only one acre to lease, you likely have LESS negotiating power. I am not familiar enough with leasing activity in Mississippi to tell you whether $100 per acre is a fair bonus offer or not. However, I'd check with your neighbors and see what they were offered. You should be able to get just as much.
Ask the company what the highest bonus they've paid is, and then ask them if you can get it if they haven't already offered it to you. Additionally you could possibly get NO bonus and a 1/4 royalty instead of a 3/16. That way if a well was drilled that came in good, you'd likely get more money in the long run since 1/4 is 50% more than 1/8. I do this all the time on my smaller properties like that. Some companies will go for that, some won't.
3/16 royalty is not bad, some try to lease for 1/8. If you are near lots of new, recent, good production, then I'd ask for more than the $100 per acre based on that. In "hot" areas of Oklahoma (where I live) lease bonus amounts are in the $5,000 per acre range! Don't get your hopes up though, most bonus amounts are not that high, but it goes to show you it may pay if you shop your acre around a bit to any other companies who might be leasing in the area.
To find out who else may be interested in leasing your acre, you could visit the county courthouse land clerk's office and look at the "index" for your land to see if some other companies are leasing nearby. The clerk at the courthouse could help you locate your land if you have the legal description with you when you go. If you find some other companies, contact them by phone and tell them you are a mineral owner and would like to see about a lease, since you noticed they were leasing nearby.
