Leasing Your Mineral Rights For Oil and Gas Exploration

When it comes to leasing your land for oil and gas exploration, or for that matter coal, gravel, or extraction of any mineral, you need to be aware of all the details before signing it and how those details could affect you and your future heirs interests.

Oil and gas companes want to pay as little as possible to lease your land and get the most possible royalty to keep for themsleves. You can negotiate both the amount of your up front payment (for allowing them to drill) and the amount of royalties (percentage of oil or gas they find) that you get to keep.

Often a small independent oil company will "low ball" the landowner with a smaller up front payement that a major oil company would have paid for the right to drill on your property in exchange for you getting a larger percentage of the well's production.

Most likely you will be approached by an oil company "land man", not the other way around. If there is active production in your immediate area you may wish to contact an oil leaese broker who, for a fee, negotiates with several companies for the best deal.

These can save you time and often put more money in your pocket.

Remember that you have a lot of leeway in the things you get back from the oil company leasing your land. When you lease your mineral rights you also give up, for a long time, the area where the well and tanks are located as well as suffer damage to crops and grassland from the digging of pits, pipelines and oilfield roads. You can negotiate an amount of compensation for this and for future roads and oilfield activity. (This applies to all landowners, not just those who own the mineral rights.) So if you just own the surface rights it is wise to contact an attorney to work out the best deal so an oil company that buys the mineral rights cannot tear up your land without compensation.

Going through a good oil and gas attorney is a must. You will sacrifice some of the profit you make from the first lease payment but the deal you make can be much sweeter in the long run if you use a good lawyer to help negotiate your oil and gas lease.