Always Review and Revise Oil & Gas Leases!
There is almost never a take-or-leave lease in the oil and gas industry. If a land man or leasing agent, or anybody else puts a Colorado mineral lease in front of you and says you cannot change anything, do not sign it. Simply show him to the door. Oil exploration companies understand that most people will sign just about anything, so they begin their offer with a horribly unfair, one-sided lease. A certain number of mineral owners sign without complaint. Then the oil company, through their land-men, go to work on the tougher customers. They are well aware of the shortcomings of their own leases and fully expect a careful and lengthy addendum to be tacked onto their lease offering, which is more protective of the mineral owner. If you are considering leasing your minerals in Colorado and would like a lease review, call us today.
Royalty Amounts Tell You Quite A Bit
The royalty percentage you are being offered tells you a good deal about who you are dealing with. A 20% offer indicates that you are probably dealing with the actual company that intends to explore and drill on your land. An offer at 12% almost certainly indicates that this person will not personally do anything, but rather will seek to find a sub-tenant who will lease from him at up to 20%, thereby allowing this guy to capture the 8% difference. This is not always a bad deal, since it motivates the lessee to hunt around and try to find a real operator and interest them in the minerals. But it helps you understand who you are dealing with. Keep this in mind when speaking with a land man. If you have questions, call an oil and gas or mineral review lawyer at our Denver Colorado office. The initial call is free. We want to speak with you.