Procedure to Enter into Lease
Chapter 20, Article 1, Section 7 of West Virginia Code sets forth the procedure to lease minerals subject to Division of Natural Resources control and jurisdiction. According to this statutory framework, the Division of Natural Resources and interested bidders shall observe the following procedure to lease oil and gas:
- An interested bidder notifies the Division of Natural Resources of its interest in a specific parcel of land or waterway subject to the Division of Natural Resources' control and jurisdiction. Interested parties may notify the Division of Natural Resources of their interest by submitting the Mineral Lease Nomination Form.
- Upon receipt of a mineral nomination form, the Division of Natural Resources will seek written approval to lease from the Office of the Governor.
- If the Governor approves the development prospect, the Director of the Division of Natural Resources will seek competitive sealed bids to responsibly develop the prospect.
- The Director will solicit competitive sealed bids by notice of publication in a Class II legal advertisement placed in the primary newspaper in the county in which the minerals are located. A Class II legal advertisement will be published once a week for two successive weeks.
- Bidding opportunities for the advertised prospect will close after the Class II legal advertisement expires. Bids will be evaluated, and the director will select the highest responsible bid.
- The awarded bidder must then provide a sufficient bond and execute a lease prescribed by the Division of Natural Resources. The director reserves the right to reject all bids received and may solicit another round of competitive bids if those previously received are deemed unacceptable.
How to submit a bid to the Division
Production and Assurance of Maintaining Environmental Integrity
Those interested in developing the Division of Natural Resources' coal, oil, gas, sand, gravel and any other minerals by environmentally sound methods will submit a bid. The Division of Natural Resources will review development procedures in conjunction with any other federal and state agencies which may have jurisdiction or regulatory control and/or enforcement authority over such exploration and production practices.
The successful bidders or bidder are required to develop and produce the prospective minerals in a prudent, efficient, economical manner, without waste, and in the best interests of the state of West Virginia. Operators are required to observe best practices in the industry and act in a workmanlike manner in accordance with the most up-to-date exploration and production practices. The Division's leases will require no surface use.
The lease will be on a form prescribed by the Division of Natural Resources.
Prospective operators will submit bids on a per acre basis for each tract. Leases will be awarded to the highest bidder that offers the best opportunity to responsibly develop the prospect in a manner that protects the interests of the State of West Virginia.
The Division of Natural Resources requires a royalty equal to 1/5 or 20% on the gross amount of oil and gas produced and sold from the leased premises, without deductions for production, transportation or marketing costs. Although the bonus is negotiable, the royalty is not.
The Division of Natural Resources requires prospective bidders to submit a deposit as earnest money for each bid being submitted. Appropriate earnest money deposits are outlined in each property’s bid prospectus. The Division will return earnest money deposits to unsuccessful bidders.
Bid Submission and Cut-Off Date
All written sealed bids shall be received by the Division's Office of Land & Streams by a specific date and time established by the Division of Natural Resources.
Bid Opening and Review
The Division of Natural Resources Office of Land & Streams will hold a public opening of all bids at a location designated by the Agency. Any bidder that nominated a tract or parcel will be notified by the Division of Natural Resources about the public opening of bids. Thereafter the Division will review all bid proposals it receives.
The Division of Natural Resources makes no warranty of title and reserves the right to reject any and all bids.
Bid Registration Form
Each individual bid shall include as a part of its bid package the completed bidder questionnaire form to assist the division in its evaluation of the bidding entity to determine if its technical expertise and economic resources are sufficient to carry out its proposal.
The Division of Natural Resources will notify the successful bidder of its bid acceptance no later than two weeks from the bid opening date.
Full payment is due 30 days from the date of acceptance of the bid, subject to negotiation of an acceptable agreement to develop desired minerals.
Failure to comply with any of the terms, conditions, or procedural requirements of sale may terminate the bid.