You own mineral rights and have been contacted by someone wanting to lease these rights. This may be a very fruitful opportunity for you. Before you celebrate, you should negotiate an equitable lease. The following 5 tips will help you through the process.
- Determine who else has been contacted. Do you own the mineral rights with others? Who owns the surrounding mineral rights? You may be able to negotiate a better lease when you and all other interested mineral rights holders work together as a group.
- Educate yourself. Who in the surrounding area has signed leases for their mineral rights? Who did they sign with? What are the details and terms? Is there any production in the area already? If so, how good is it? Learn as much as you can about other mineral rights leases in the area. This will help you better understand the value of your mineral rights as well as prepare you for what to expect.
- Don’t jump at the first contract and sign without knowing and understanding the terms. Yes, it’s extremely exciting to be able to lease your mineral rights and make money from your property. And yes, you may be able to make some quick cash. However, do your homework. The first offer that’s made isn’t always the best offer. On the other hand, the company who is offering to lease your mineral rights may have a quota and choose someone else’s mineral rights over yours if you play hard ball for too long.
- Know who you’re dealing with. Are you negotiating with a landman, an independent contractor and representative for oil and gas companies, or are you dealing with a broker who intends on flipping the lease to make money for themselves? Know who you’re negotiating with and who they work for so you can make the best decisions for you and your assets.
- Read the fine print. If you don’t understand any of the terms, ask the person who presented you with the lease. That is their job. Have them explain the term or writing that is unclear to you. Make sure that it makes sense before assuming that it is true.
Oil and gas attorneys can be expensive. Many are very busy, which may result in a prolonged effort to get this new lease wrapped up if you don’t know what you want. You may want to consider one to help you finalize the process. Consulting with an attorney who deals with oil and gas leases in the area of your mineral rights can be beneficial. Chances are, they are already familiar with the company desiring to lease your mineral rights. They’ll likely have a better idea of the going rate in your particular area. Likewise, they may already know which terms you’ll be able to negotiate to your advantage.