Have a competent Oil & Gas attorney or qualified professional provide
you with a lease that does the following things:

1. Ensure you are getting the highest bonus and royalty the market will
bear in your area.

2. Limit it to a 3 year Primary Term, with no extension.

3. Always make sure you get a cost free royalty. If not, you have lost
2-3% of your royalty in equivalent value.

4. Ensure royalty is paid on the same basis that the producer is paid.
Your attorney should have language that will prevent the company from
shifting profits from one affiliate or subsidiary to another. For
example, the gathering, processing, transportation and marketing areas
need watching. Must consider the company's true point of sale, so they
cannot reduce the wellhead royalty price of the gas. I can assure you
they will do this if the lease allows it. What do you think their lease
will allow? Get your own!!!

5. Do not allow pooling unless it ensures your minerals go into the
pool first, and are used to form the majority of the unit. Avoid
pooling if possible.

6. Penalty & Interest for late royalty payment. Define what happens
when production ceases in paying quantities.

7. Have requirement to drill if an offset well is drilled near you, ie.
within 660' (downhole wellbore withdrawal point) to make sure you are
protected from drainage.

8. Shut-in royalty should be at least $5000/well/year as a Condition,
not a Covenant of Lease. Limit it to the Primary Term if possible.

9. Pugh Clause, Continuous Drilling, etc. What this simply means is
that the lease will stay in force beyond the Primary Term (3 years) so
long as a well is drilled (try for 90 days, 180 days is ok too). Once
drilling stops, then ONLY the portions RETAINED by producing wells stay
leased as HBP (Held By Production). Specify the areas allowed. In the
Barnett, use 40 acres for a vertical and Rule 86 for a horizontal,
which will allow about 160 acres typically. This is a VERY important
part of the lease. The "version" the company will drop on you will
allow them to hold 640 acres with 1 well. Don't fall for their tricks.
If at all possible, try to get Committment Wells within the Primary
Term. State that if they are not drilled as required, the lease will
terminate.

10. Make NO Warranties concerning your ownership. Put that monkey on
their back!

11. Get a Full One Way Indemnity from all causes or reasons from the
company. Your lawyer can help get tight iron clad language. Nobody
likes paying attorney fees, so get the indemnity. The company won't
offer it to you!

12. Require $10 million of insurance coverage, which should include
pollution coverage.

13. Tightly define Surface Use. Consider the following points: Limit
size of drill sites and producing pads. Require site restoration and
removal of fixtures.Consider landscaping or use of frac ponds as lakes
later (not the drilling "slush tank") Stipulate damages up front. You
can even designate locations in some cases. Do not give away the right
to drill produced water disposal wells. Make that a separate deal, for
more profits. Specify road improvements. Noise, operational hours after
drilling, lighting, dust control, etc. By the way, talk to your CPA
about classifying some of the Bonus as pre-paid damages. The companies
will work with you on this, and it makes that part of the bonus Tax
Free!

14. Tightly define Water Rights. Do you want them drilling water wells
on you? They will if you let them, as they will need over 5 million
gallons to drill and frac your well.

15. Tightly define Force Majure. This is the clause that will allow the
company to get out of your lease, or suspend the timeframe, based on
acts of God. Make sure it is very well defined, and limited to just
God.

16. If you have to hire an attorney to enforce the lease, make them pay
the costs if you prevail.

17. Never allow seismic to be shot until the lease has been PAID IN
FULL. PERIOD!!

18. Get the right to approve any assignment of the lease they may want
to make.

19. Get access to all data

20. NEVER SIGN A LEASE IN EXCHANGE FOR A BANK DRAFT. Always wait until
you get a cashier's check. A Bank Draft gives them an option to back
out, but once you sign the lease, you are committed.

Most importantly, Oil & Gas Leasing is a very complicated business,
with very long term implications. Don't be afraid to get help from
COMPETENT well established players. Make sure you know how long they
have been in the business of LEASING. Having worked thirty years as a
rig hand or an oilfield equipment salesman doesn't count in this
"leasing" game.

Do not fall for the temptation of fast money on the bonus.

Remember, the large print giveth, and the fine print taketh away!