The lease buyout company agent is suggesting that my site is at risk of termination. Why would they
be offering to buy it if it was?
There are three primary reasons. First, the lease buyout companies are buying thousands of leases and can therefore divest the risk of termination across the portfolio. In that regard, diversity of leases is good for them. The more diverse the portfolio is in type of lease and which carrier, the better for the buyout company because it is harder for any single event to cause the termination of a large number of leases. Secondly, the lease buyout companies don’t really care about the long term risk because they will attempt to bundle and sell the leases within a few years. Thus, their only concern is that they can assemble a portfolio that doesn’t have theappearance that it will be subject to higher than expected terminations. Lastly, they don’t actually believe that the leases will be terminated. However, we have found that less skilled salespeople tend to try to scare landowners instead of emphasizing the positive aspects of selling the lease.