A lease offer: what to read before you sign
A lease offer usually comes as a letter naming a bonus per acre, a royalty and a term, with a printed lease form and sometimes a draft for the bonus. The letter is the pitch. The lease form is what you would actually sign.
What it does
The letter and the form do not always match. Read the form itself for the royalty fraction, the primary term, the cost language, and any clause the letter never mentions.
The bonus is often paid by a draft or order of payment, not at signing. The company then has a set number of days to check title and pay. If the lease is signed and recorded before payment, you can be leased without having been paid yet.
Printed forms are written by the company. That does not make them unfair, but it does mean most of what helps an owner has to be asked for: a Pugh clause, cost language, a shut-in limit, surface terms.
What we mark on a review sheet
Normal
- A letter that names the bonus per net mineral acre, the royalty fraction and the term.
- A title check before the bonus is paid.
Missing
- Post-production cost language, a Pugh clause, a depth release, a shut-in limit, surface terms.
- How many net mineral acres the company shows you owning.
Ask about
- A draft with a long payment window, or a lease recorded before you are paid.
- A deadline that leaves no time to read the form.
- Terms in the letter that are not in the lease.
Questions to ask the company
- How many net mineral acres do you show for me, and from what records?
- Is the bonus paid at signing or by draft, and how many days does the draft run?
- Will the lease be void if the bonus is not paid, and will you wait to record it until it is?
- Will you put the terms from your letter into the lease itself?
Common questions
How do I know if an oil and gas lease offer is fair?
Compare the royalty, bonus and term with what others nearby are being offered, then read the form for what is missing. Most of what helps an owner has to be asked for.
What is a bonus draft?
A conditional payment for the lease bonus. The company has a set period to check title and pay. Until it pays, you have signed but have not been paid.
Send it before you sign
Tell us what you got and what you want to know. We reply by email and tell you how to send the pages. A landman reads them and sends back a one-page review sheet.
Email hello@landman.review with what you got and your question, or call (307) 263-8515.