Recently received FedEx package from Goodrich stating they had bought my contract from Devon and wanted me to sign a form and return it to them to extend the lease for 2 more years per original contract option.
When I signed the original lease over 3 years ago, I was told by the land man that the 2-year option was a safety check in case the unit was drilled toward the end of the 3 years, and if nothing happened in the 3-years the 2-year option was void.
The 3 years have passed and my property is not yet in a unit! I told Goodrich that I was not interested in signing a 2-year extension at what they offered. Still have the voucher and will send it back if I don’t here from them in a few days.
Anyone else having this issue?
MIke, based on your description my opinion is that the landman told you something that was his/her opinion and not a part of the lease form language. I have never seen a lease clause that required a unit to be formed in order to exercise an extension option. Re-read the extension clause in your lease and I think you will find no language requiring a unit. Your acceptance and execution of the lease leaves the option to extend in the hands of the lessee. If Goodrich chooses to exercise their option then you are bound to accept payment unless you would prefer to seek legal counsel as to any other possible courses of action.
Even days after the 3 yr experation date has passed?
Sorry I missed that your three year primary term had expired. The extension option has to be executed by the lessee prior to the expiration of the primary term. So your lease is no longer in effect and it's your decision whether to sign the extension and keep your old lease terms in force or wait to see what may happen over the next year or so. Goodrich obviously believes your area has potential. The question may be, does any other company agree with that assessment and would they be willing to offer you a lease in the future?
doty, the extension option is void if not exercised by the expiration date of the primary lease term.
It's cheaper for Goodrich to ask for an extension that revives the original lease and pay the extension price than to go through the process to negotiate a new lease from scratch. Especially if the original lease contained terms favorable to Goodrich. It makes me wonder why Goodrich didn't exercise the option in a timely manner and how many expired leases there are among those they acquired from Devon. Goodrich has had those Devon leases for years.