option to extend lease with gas company

WE signed a lease with xxxxx gas co, 5 years ago for a small amount of acreage. Our term is expiring in may and they already sent us a check for a new 5 years. We didnt know that was in our lease until we got reading that the gas co has the right to extend for same going rate. The lawyer we had look over our lease at the time apparently wasnt too knowledgeable. Do i have any options at this point to not sign the check and take to my NEW attorney to see if they can help me renegotiate for the going rate. I know I can ask my attorney this question, but I quess that 1 hour session with him will cost me 150 bucks and this session is free! I want to know if anyone has had any luck with this and what my options would be. Has anyone else come up agianst this. I also have another larger amount of property that I signed in a lease at the same time with same company and havent got anything on that. I am assuming that means Im in a unit that is near to me, am I am to renegotiate that? I havent offically recieved div orders that im in a unit and that lease is also expiring in may.

thanks agian

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Permalink Reply by kit on April 20, 2015 at 12:24am

First off,thank you Finnebear for your reply. The wording is as follows, Paragraph 5. Lease term, commencement, termination, extension and renewal.

The initial term of the lease shall begin as of the effective date of the lease and continue in full force and effect for a primary term of five years and as long thereafter as any leased minerals are produced from the premises or land or unitized therewith or for as long thereafter as the premises is used for storage of any leased minerals or the lease is maintained under any other provision thereof. lessee at is sole option may extend the primary term for add 5 years. again, we are not in a unit yet

Permalink Reply by kit on April 20, 2015 at 12:41am

Theres nothing here on my acreage in question, no unit, no production, no storage.

Permalink Reply by Finnbear on April 20, 2015 at 2:04am

"storage" here isn't normally applicable until after a well is drilled. There may well (should) be an addendum to the lease that strikes the ability to use the leasehold for storage. Without the WHOLE lease and any attached Exhibit or Addendum, we have no way of knowing what kit agreed to in the original lease signing.

Permalink Reply by Finnbear on April 20, 2015 at 1:59am

Did you mean to write (see bold)?

"lessee at its sole option may extend the primary term for an additional 5 years."

If so, then yes, you agreed to allow them the ability to renew/extend the lease for another 5 years, if they choose to do so. You wrote nothing about the money involved for the extension, so I'm left wondering if you didn't post the whole clause. There may also be more language in your lease in the order of payment section concerning the money involved (if any) in this extension/renewal.

Permalink Reply by Dexter Green on April 20, 2015 at 5:34am

You are most certainly in for another five year term if they choose to extend it.  

Permalink Reply by Barry D on April 19, 2015 at 4:44pm

As Finnbear has asked, post the exact wording of the extension clause.

However,having read these types of clauses many times, my guess is that you don't have a choice.

As far as seeing an attorney, that's a decision you'll have to make. A decision which will depend on the level of comfort you reach from reading the OPINIONS expressed on this site (they are only opinions). I don't think there are any attorneys opining here.

Permalink Reply by john e. shiben on April 20, 2015 at 6:31am

Yes: if it has not been drilled you can renegotiate , the price of the acreage and the percentage of the royalty. The cost of the attorney is of no consequence compared to what you can lose. Again, find an attorney who is dealing I oil and gas leases with a good reputation.

Permalink Reply by Finnbear on April 20, 2015 at 7:21am

You may not be able renegotiate if you gave them permission to extend/renew in the original lease. Generally, if the O&G was savvy enough to put a renewal clause in their lease, they also spelled out the terms for the renewal in the lease too. That being said, NONE of us can answer definitively UNTIL we see the complete original lease and attached exhibits/addendums.

Permalink Reply by searcherone on April 19, 2015 at 4:19pm

Kit, unfortunately I think you are stuck with the renewal, that is a fairly standard lease item.    

While Statoil will probably drill all of their leasehold,  the grapevine about how they do business and pay royalties is not as positive as Dexter states in his post that "Statoil is a really good company".  

Permalink Reply by Dexter Green on April 20, 2015 at 5:33am

Big picture they are a really good company.  I'm not sure about the local operations, I will admit.  But I'd rather have a Statoil lease than a Chesapeake lease.  

Permalink Reply by Dexter Green on April 20, 2015 at 9:56am

That's disappointing to hear.  

Permalink Reply by Janice L. Hancharick on April 21, 2015 at 3:12am

Just one other idea about the fine print in your lease.  Do you see the word "INTENT" anywhere?  Intent is a slippery slope in any document.  It's difficult to prove what the other party's intent is if specifics aren't nailed down.  Some older leases used that term to hold leases simply by setting old pipe or equipment on the premises.

It's no fun to part w/$$$ if you already know the answer and just want confirmation. However you have much to lose if you don't.  Again this is an opinion I'm offering.

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