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Tips on negotiating an oil and gas lease

Oil and gas leases can be complex documents. Proper negotiation is crucial in this case to ensure a lease is legally binding but also reflects your best interests. MineralWeb.com offers the following tips in this case, which can help mineral owners in California protect their highly valued assets.

Be Conservative During Negotiations

Credibility is key during the negotiation process. That means if you make claims you can't back up the other party is likely to not take anything else you claim seriously. This is particularly relevant when you’re discussing asking price. If you claim you won’t entertain other offers under a certain number, you could find it coming back to haunt you if you end up agreeing to a lesser amount. A conservative approach is best, and be sure to treat the other parties civilly (as this will show you’re not rattled).

Keep Non-Contiguous Tracts on Separate Documents

If you own several tracts of non-contiguous land each one should have its own lease. Putting all tracts on the same document can lead to problems down the line, as production on one tract may be affected by what is happening on another. You can also take into account variances in each tract by tailoring a lease to that specific plot of land.

Don’t Sign Too Soon

Negotiation is all about push and pull. As a result, you should never sign a document until you’re completely satisfied with all of the clauses contained within. Once you sign you are bound to the lease and going back on what is required of you can lead to numerous legal issues. Instead, take your time during negotiations to make sure your needs are sufficiently met.

 

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