What occurs at the end of the lease?

Owner of over 60+ acres in TCounty...  Would I understand correctly a standard  five year lease if I were to comprehend that after the initial five years are over, I am free to renegotiate up front per acerage fees and royalties.  In other words, I would be able to in "good faith" enter another lease and expect more or less monies up front and same / different royalties.  After the first five years are over, I am free to negotiate almost as if there had not been a lease signed at all.

 

Please respond.

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Replies to This Discussion

Permalink Reply by Brian Day on November 5, 2010 at 2:10pm
Read your lease carefully or get a lawyer to look at it. There may be a clause in there that states the lease can be automatically extended at the same terms for another five years unless you give notice in writing that you want to end the agreement. There are usually time limits to this written notification that YOU must give. Is you lease an East lease?
Permalink Reply by chris on November 5, 2010 at 4:44pm
No lease as of yet..........still researching. Thank you for your advice!
Permalink Reply by Lynn Wigglesworth on November 6, 2010 at 1:47am
With a new lease, I suspect that you would be in a production unit before it expired. East especially is trying hard not to let leases expire. It's very possible to get in a unit that isn't producing yet, so it could be years before you see any royalty money.
Permalink Reply by chris on November 6, 2010 at 3:56am
Any recommendations as far as who are the better companies with the most potential for the land owners? Thanks for your help!
Permalink Reply by Lynn Wigglesworth on November 6, 2010 at 6:19am
That depends on where you are. In some parts of Tioga county, East is the only one offering. I was negotiating with Chesapeake, but they pulled out of the county.
Permalink Reply by chris on November 5, 2010 at 4:39pm
Thank you for your advice!
Permalink Reply by Ann Ticopa on November 6, 2010 at 3:50am
Also be aware that with a standard lease, your entire property can be held past the 5 years by including a portion of it in a production unit.
Permalink Reply by chris on November 6, 2010 at 3:57am
Thank you...........there are so many things to consider and everyone's input is so helpful. I appreciate it!
Permalink Reply by chris on November 6, 2010 at 4:35am
I have not signed w/anyone as of yet; I have had a few offers or insults so far...
Permalink Reply by chris on November 6, 2010 at 5:36am
Ultra, also I've heard that they have tendered offers verbally and when it came time to sign, the contract had been different than what had been agreed to verbally!!!!
Permalink Reply by Lynn Wigglesworth on November 6, 2010 at 6:22am
Ultra is pretty much a clone of East. I talked to them several years ago, and wasn't impressed. They have exactly the same offer/lease, and often do joint ventures with East.
Permalink Reply by Ann Ticopa on November 6, 2010 at 6:52am
Never, ever make a decision based on a landman's representation of what the lease says. (You will probably have to listen to the sales pitch to get a copy of the lease.) And if you are told there is an Addendum that modifies a term in the lease, ask that he/she email you a copy of it. Also, take any claim that your property would soon be included in a production unit with a grain of salt. Most landmen are middle-men who don't have access to that information.

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