All things pertaining to the Marcellus & Utica Shale
Oil & Gas Leasing 101
1. The oil & gas lease is a binding contract, it is not a purchase agreement that you can get out of after three days. The terms of this lease will last beyond your lifetime and affect the lives of your children and grand children. It is not to a contract to be entered into on a whim or for quick up front money.
2. The landman is not your friend, he works for and is paid by the oil & gas company. He/she is paid to look out for the interests of the oil & gas company not yours. Don't believe anything a landman tells you, it won't be in the lease you sign.
3. Leases are very complicated chances are you won't understand some or all of the clauses in the lease , so why would you sign it ? GET an OIL & GAS ATTORNEY ! It will be money well spent. Or if you really can't afford an attorney find a landowners group with legal representation.
4. Even if you have an attorney or belong to a landowner group you should become educated about the lease. Don't sign a lease if you don't understand it, even if you have representation.
Those are my basic thoughts I will now open the discussion to the rest of the class.
Mark
Views: 2515
Replies to This Discussion
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Permalink Reply by Gasman on -
Could not agree more...... Especially item #2....they are very friendly, polite and appear genuine but beware!
Land owner groups are the way to go.
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Permalink Reply by USA Landowner on -
I agree that you have some fine points here Mark...thanks for sharing.
I will add that if you hear a land agent state when you ask specific questions about the clauses..."but you can take your time to learn bout all of this as your lease will expire in 5 years and then you can renegotiate again'.....then get out your audio/video recorder and add that into the contract (with their signed permission of course).
oh..and be sure to mark out the clause that states, "No oral warranties, representation, or promises have been made or relied upon by either party as an inducement to or modification of this Lease' (that is tucked in small print right above the Lessor's signature line usually.
and mark out the one that states "Lease Development" "there is no covenant to develop the Leasehold with a certain time frame, and there shall be no leasehold forfeiture for implied covenants to produce. Provisions herein constitute full compensation for privileges herein granted". Now remember if you didn't mark out the shut-in fee of $5.00 per acre per year that is the only future expectation if you don't receive royalties...what a joke with this current situation in the Marcellus...maybe that was good in the early or late 1800's.
So be careful cause they know that you have to spend so much time figuring what should be on an addendum that you might overlook some of these clencher clauses on the lease contract.
http://www.yourdictionary.com/clencher
Yet more on the positive side if you already signed...they wouldn't be including your acreage in who knows how many (7, 12, stillgrowing) units with drilling rigs popping up everywhere if they weren't intending to produce.)
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Permalink Reply by Fang on
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VG,
Good points. People need to understand the lease, get an attorney or join a landowner group, but get educated.
Mark
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Permalink Reply by Robert J Rotz on
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Mark,
i learned the hard way. The oxford oil land man was the nicest , "looking out for me" guy i have ever met. now two and a half years later i realized that every question he answered was at the very least a half truth. His name is Arnie, a name i will never forget as long as i live. my trust in him cost me $2,030,000.00 . im using the amount my neightbors signed for times my acerage. i was so excited to sign with them because " they only sign the good properties" and i was lucky they were at my door. Believe me i know it is all my fault, but a little honesty would have made me do some research, i guess thats why he lied. i would love to see him again someday. i wake up at least three nights a week thinking about that guy....
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Permalink Reply by Sarah on
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What if you leased for a very low price before you were educated.....?? Any advise there? There is a clause that we can take another bit I was looking for Buckeye Mineral phone number......
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I was very uneducated when I signed. I'm not sure I understand what you are getting at.
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Is there anyway of getting our of your lease? It seems we have a clause that if another company comes to us with a larger amount , the company that we signed with has 30 days to meet the offer or we could sign with someone else.
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That's not in mine. You should feel very lucky if that is in yours. I'm screwed. I will pay a fortune to somebody to get me out.
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what company is yours with? Did you read the farm and dairy? it has the clause wording on the front page.
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Permalink Reply by Bluflame on
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Robert,
Have you considered contacting Oxford Oil and proposing a "buyout" of your lease? Even if it hypothetically cost you $1Million, you would still be much better off. Obviously, you'd pay that $1MM out of the bonus on your new lease. The worst that can happen is that Oxford says "No".
BluFlame
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Blueflame, i like that name you sound like a super hero. i did offer them 500k to let me out and there reply was, " we have a plan and we are sticking to it " . i have asked countless times what that plan is and they never say. Oxford did say that they think going after the deep gas only is short sighted. i feel they are going to continue there shallow well course and tie up as many acres as they can with production, then flip the deep oil and gas someday.
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Permalink Reply by Bluflame on
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Robert,
I had a 5-year nickel and dime Oxford lease in Belmont Cty that, incredibly, they let expire last fall without sinking a shallow well to HBP the property. Pleasant surprise. I think Oxford is "The Gang that Couldn't Shoot Straight".
BTW, my wife always describes me as a superhero......and if you believe that one...!
I have empathy for you. At least you will get royalty payments at some point.
BluFlame
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