Tips On Signing An Oil or Gas Lease On Your Property

If you are a landowner in an area such as the Marcellus Shale or Barnett Shale you probably will be approached in the near future, if you have not been already, by a "land man" who works for an oil company wishing to lease the mineral rights on your land.

This is not a decision to make lightly or quickly thinking that the chance might get away. If they have approached you they believe that there is the chance that oil or gas potentially worth millions lies under your land and the ball is truly in your court.

You have all the time in the world to work out a deal that is acceptable to both you and the oil company.

You should first consider the amount of long term revenue or oil and gas royalties that you will be paid as oil and gas is produced. You can seek a higher percentage, within reason, and even a difference of 1/16th of oil and gas royalties can mean a huge difference over the life of the well.

Also, as a landowner who cares about your property you need to assure that the oil company will leave a small footprint, pay you for damages, and in the future (this is very important to negotiate) put things back like they found it. When oil wells play out many landowners have not negotiated when and how they should be removed and how the land will be planted back in native vegetation or restored to cropland. Oil wells don't last forever but the damage, such as saltwater spills, can ruin land forever.

Always negotiate into an oil and gas, mineral rights contract, the specifics of how the oil company is to behave on your land. Do you want certain activity limited during hunting season? This too is negotiable.

Do you want the oil company to make water wells out of abandoned or unproductive wells? This is negotiable as well.

Do you want the oil company leasing your mineral rights to build fences and gates in a specific way and fence off oil tanks so that your livestock is not harmed by equipment?

All of these things are negotiable when signing an oil and gas lease. Contact a lawyer in your area that specializes in oil and gas law. If none is available in your area find the nearest one.