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Permalink Reply by Trapper on August 28, 2014 at 5:32am

It will be interesting to see how lease renewals are handled. There is no way so much land can be drilled fast enough to hbp most of us before expiration. Will the 1st option clauses be honored or can they weasel better terms for themselves in the process? Hopefully things will be above board when the time comes.

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Permalink Reply by Barry D on August 28, 2014 at 7:14am

Trapper,

Great point.

When I wrote this thread I didn't even think about expiring leases.

Not only will companies have to obtain unleased property for drilling units, they will also have to contend with deciding which expiring leases to renew.

Which may create an opportunity for other companies to scoop up property where leases expire. Or begin a top leasing program now.

Or the companies that now own soon to expire leases may assign them to other companies or JV with other companies.

Lots of variables here.

Your response certainly has offered food for further consideration.

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Permalink Reply by searcherone on August 28, 2014 at 2:34pm

Some food for thought:  if you negotiate a 5 year lease with a 5 year renewal clause that renewal needs to be at a higher rate because probably the acreage is worth more as it is proven by wells in your area..    For example the renewal could be at 110% of the original  if you received $100,000 for the first five years the renewal would be 110,000 for the second five years.

The less pages to the lease the less protections the landowner has. Treat the leasing process just like a job that you want to do very well.  The landman/woman is there to get you to sign for the least amount of protection to you and at the lowest price.

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Permalink Reply by Joseph-Ohio on August 28, 2014 at 4:10pm

Sounds solid.

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