Mistakes to Avoid When Negotiating a Mineral Lease

Receiving a lease proposal for your Oklahoma minerals can be exciting. Companies want to make you a fair enough offer so you’ll strongly consider their proposal without the need for much negotiation. However, anyone involved in mineral rights investing will tell you negotiating is essential to ensure you understand exactly what’s being discussed in the contract. We’ve taken a look at four common mistakes people make when negotiating a mineral lease, so you can avoid them during your negotiations.

Not Looking At Anything Except The Price

Oil and gas companies want to give you an offer upfront that looks great so they’ll get your attention. While your royalty percentage and lease bonus payment are important factors, they aren’t the only things you should pay attention to. Understand how the surface rights work and how the company plans on using the surface in which you own. If you aren’t careful and don’t read the contract thoroughly, you could end up spending your lease bonus cleaning up problems that you didn’t know you were responsible for.

Being Unrealistic In Your Demands

Giving off the perception of being knowledgeable about oil and gas minerals will give you leverage in your negotiations. This means don’t be too demanding in your requests and be realistic with your offers and counteroffers. Work with experts to determine the value of your land and Oklahoma minerals so you’ll be able to justify your reasoning for making a demand during negotiations.

Rushing Into Completing A Deal

When you’ve got a lucrative contract ready to be signed, it’s human nature to want it completed as quickly as possible before something falls through. But with mineral rights investing, negotiations should progress slowly as all parties do their due diligence. The only time you should be worried is if there has been a stall in getting a deal done. As long as the intent is there, you’ll be doing yourself more harm than good by rushing into a deal.

Wasting Money on Attorney Fees

Hiring an attorney is highly advisable at the right time. A big mistake people make is hiring an attorney immediately after receiving a proposal, which ends up costing them more money because of the attorney fees. Instead, use your attorney’s time most efficiently by doing your own research and seeking assistance from other experts in mineral rights investing. Then you can always hire an attorney to review the final documents before making a final agreement.

Eckard Land & Acquisition helps mineral owners understand details  about the mineral lease they are getting into. Sometimes leases will look great on paper at the initial offer, but there are many aspects of the proposal that make it a bad situation for the investor. We are here to help you identify those potential issues so you can maximize the value of your oil and gas minerals. Be sure to contact us at any time, no matter what stage you’re in with your mineral negotiations.

Contributor: Troy W. Eckard

Contributor: Troy W. Eckard

Troy W. Eckard has over three decades of energy expertise. Troy has been investing in tangible asset since 1985, and built multiple companies focused on aggregating, maturating, and liquidating investment opportunities.​ He's the longest World MoneyShow attendee, and is striving to continue his presence to inform and educate investors on tangible assets.