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 Bill Bergseid on April 26, 2015 at 5:01am

It is too bad you signed the deal originally and you were not informed by your attorney or you did not read the grant you made of an option to extend the lease.  But you made a bargain that you were happy with at the time.  The gas co. has fulfilled it's part of the bargain by sending you the money--if it was timely paid in the manner prescribed they have fulfilled their part of the bargain.  What you do with the money is up to you.  My advice in the future would be to ask before hiring an attorney about his/her experience representing mineral owners in lease transactions.  No different that hiring a surgeon for removing a gall bladder.  The orthopedic surgeon could probably do it, but you want a surgeon who does gall bladders on a regular basis.

Permalink Reply by Trapper on April 26, 2015 at 7:29am
Well said Bill,well said.
Permalink Reply by dennis elias on April 27, 2015 at 1:44am

5 years ago , when this first started , we tried to tell many people not to sign a roll - over lease after the expire of the lease , We try to encourage them to have negotiation rights after 5 years . But many land owners were putting dollars signs in front of there eyes and thinking this Utica shell wasn't going any place .Now this is what happens and if you think they have forgotten about you ....forget it . Have not heard of a case winning . Sorry ... also I remembers we talked to several lawyers and they were clueless about Utica Shell five years ago . My advise don't  put the wagon ahead of the horse . You may still have a chance on pipelines to negotiate... and if so .... don't believe most of these Land men  first , second, third offers . it took me 4 months of negotiating with them and they met all of my demands . That was Sunoco . Good Luck    

Permalink Reply by Kathleen on May 3, 2015 at 4:15am
Don't beat yourself up over this since almost all leases have this language. Even if you knew at the time I believe you would have signed it. You were happy at the moment and you would have found out after paying more to the atty that you wouldn't have gotten a lease without that language.
5 yrs is very common while a few have 3 year lease renewal.
I've known so many people that went to landowner meets over and over, heard the questions asked, had the lease read to them and they still missed this.
Permalink Reply by Jeffrey Beunier on May 4, 2015 at 6:25pm

What I find interesting is that the leases are almost stand 5 + 5's out here in Appalachia, but out in the DJ, in TX, etc - the leases are usual 3 +2. 

The reality of the secondary term via a lease option is it's really a one way deal as many are finding out - if the going rate is below the extension amount the company has the incentive not to extend the lease and renegotiate or release the acreage at the going rate.  

If the going rate is above the extension payment amount, then they will make the payment and extend for the lower amount. 

I can't blame them, capitalism is what ti is, but I also laugh when I get the sales pitch of how lucky it is to have that clause in a lease - "its like getting a second bonus payment".  And like Bill said above, hindsight is 20:20, at the time I'm pretty sure people were ecstatic - like finding a $20 bill in your pocket.

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