Unfortunatly, Philip is correct. Read the lease carefully and then have an attorney look at the lease. I signed a bad (5 year) lease in 2009 and now wait to see if they drill. My guess is they will sell my lease, and whoever owns it, will drill a shallow well (with little royalties) to hold my land, bound by this bad lease forever. This is truly sad for the hardworking American landowner to be taken advantage of like this. The rich O/G companies lowering themselves to outright lying and cheating to make themselves richer. A few of my neighbors have signed the same lease at the same time. Oxford Oil and gas company certainly knew of the Marcellus and possibly the Utica plays at that time. I do not think this is any different than selling someone a "lemon" used car. In this case, the used car salesman (aka: Landman) knows it is a lemon, but, fails to tell the person selling the car to. How is it any different? They are not welcome anywhere near my land!
I would recommend contacting a good attorney and contacting nenaturalresources.com. They are based out of PA and are looking out for the land owners. Their lawyers will look over the lease free of charge and look for any opportunities to get out of, or renegotiate the lease. Ufortunatly, they did not find any loopholes in my lease. They certainly tried! If they find any loopholes, then,they would ask for a small percentage of the amount that they would negotiate for with the O/G company.
I wish all the best to you and your neighbors.
Yes Finnbear. You are correct, shame on those thousands of bad lease holders who signed a bad lease years ago. Are you kidding me?? So easy to say now.
Yes, it is the landowner to blame, but, most of those bad lease holders (who you just put shame on) did so years ago and did so for the free gas to keep their family warm and to help pay the property taxes and put food on the table. We now know it is potentially a 6 or 7 figure business deal, which, previously was never even thought of in this state. The lease holders you just put shame on were too trusting and many are farmers who know of nothing else, except farming. Just a few years ago, these "bad" leases were standard leases. Shame on you and shame on the oil and gas exec.
I think you are missing to point. And the point is that many of these lease holders were lied to and misled. Shame on them for trusting and believing the landmen.
My father-in-law, on the other hand, sold some very average timber from a scrubby 8 acre woodlot at the back of his farm for over $30,000 dollars around the same time. He used a consultant who marketed his timber to numerous buyers and he got top dollar for what he sold. They did not tear up his woods, and today it is in great shape and will be a candidate for another sale in the future. This is what happens when you go into a business deal armed with knowledge and an expert who helps to guide you through the process.
As far as trusting and believing landmen, think about WHO they work for and how they get paid. Their job is to lease as much land as they can for as little money as possible in the least amount of time possible and they do ALL this for the oil and gas company (lessee), NOT the landowner/mineral rights holder (lessor). Their paycheck is provided by the oil and gas company and that is who they are working for. They are basically sharks and high pressure salesmen whose job it is to close lots of deals fast. They will tell landowners/mineral rights holders anything they have to to seal the deal.
It is a shame Elsie, I was in Marquette's office last week and told them the same thing. One of their land guys stood their saying no one knew where this was going and it just worked out that way. It's nauseating the flat out lies and lack of business ethic. Check your lease for proper notarization. Some of the older leases weren't signed in front of a notary, as well pay attention to the size of the unit. Some were originally 160 acres, that went to 640 and now 1280 acres. If you were unitized into something larger than agreed upon at the signing may be something an attorney could renegotiate. What a shame.
I am not sure if Parole Evidence would hold up in court. Probably not. Maybe a class action lawsuit? Even this would be a stretch to prove anything. I have not seen any information on this subject, so, maybe the lawyer's would NOT want to touch it since it would be very difficult to prove in a court of law. Oxford Oil and Gas Company knowingly lied to me and told me as little as possible. This is outright deception at the least and criminal intent at the worst. Those on the inside of the oil and gas companies knew exactly what potential lay ahead. They knew exactly what they were doing. This is their business. I would never have signed any lease, if I had known about Marcellus shale. I should have did my homework and seen what was happening in PA at the time. Unfortunatly, there are thousands of lease holders with this same situation. MAny are too embarassed to come out or they already know that nothing can be done with today's laws. We need some new laws to protect the landowner from this deception. I believe it is that simple.
Rumor has it, in Texas, there are laws protecting the landowner from this same scenario. Does anyone know if this is true? I need to research this.
If they put a gate on my property and claim held by prodution, then, I will tear it down. We will surely be in court if this happens. Some say that at least I could get Royalties. Not true. They can drill a well and place a choke on it. With natural gas prices below 4 USD now, due to the flooded market of NG, the O/G companies will just break even when they drill a well at 4 USD. They will choke the well and wait for the prices to go up. A large percentage of the drilling from now on will be done just to hold the landowner to HBP and bind them in the lease forever. We will almost surely be in court for years to come. At least until I run out of money to pay the lawyers.
If the oil and gas company fulfills what the lease terms define as HBP then you are HBP if you signed that lease. No amount of legal fees will get you around that. Oil and gas companies have some of the best contract law attorneys on the face of the earth in their employ and your pockets probably are not deep enough to win a pissing match with them unless they have done something blatantly illegal.
You are exactly right that most of the drilling for the next 5 years will be done just to HBP what the oil and gas companies have paid for. They are just protecting their investment just as landowners should do before they sign away anything. In places where people signed bad leases without knowing exactly what they were signing, the oil and gas companies won't have to do as much to HBP those leases. In places where the landowners did their due diligence and obtained favorable leases, the oil and gas companies will have to work a lot harder to HBP those leases.
If you signed a bad deal then take your lumps, chalk it up as a (costly) learning experience, and move forward knowing what NOT to do next time.
This is a good site to join if you are stuck in a bad lease or don’t own your gas rights at all:
You can download a free guide: West Virginia Surface Owners’ Guide To Oil and Gas.
Prepared by: David B. McMahon • Attorney at Law
Legal Aid of West Virginia
Let us stick together and help educate our fellow landowners. WE SWIM WITH SHARKS!