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Permalink Reply by FXEF on February 12, 2011 at 12:05pm

Sarah,

 

A subsurface agreement usually only allows for a portion of the well bore to go under your land without perforations, and will not drain gas from your land, therefore you will not receive any royalty. A subsurface agreement and an O&G lease are not the same. You need a knowledgeable O&G attorney. It does not matter what you have been told... It's what you sign that is binding.

 

 

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Permalink Reply by Sarah Violet on February 12, 2011 at 2:47pm

Brian and FXEF, Thank-you ! I'm sure it is me who is / was confused over the Subsurface Agreement verses O & G

Lease.  But all the rest, and so much more is what I have been able to find out on my own or have been told. I can not express how  extremely important it is to get an experienced O & G attorney.  I'm double checking everything and you can be assured I WILL be checking with an experienced attorney before I sign on the dotted line.  This site has been a blessing and I have received excellent advice and input from everyone here.

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Permalink Reply by scott snow on February 16, 2011 at 7:21am

The sub surface lease is a great option.  If you fall within a unit they are offering you the chance to participate in the total royalties of that well of any gas pulled from the unit declaration that they will eventually file with the county...  It has no bearing where or when they drill the horizontals.  Any gas that is pulled from the declared unit will produce royalties for you at the percentage and based on your acerage out of the total declared unit.

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Permalink Reply by Sarah Violet on February 16, 2011 at 10:18am

Scott, based on your comment, would that still include the bonus money ? And would your comment still be the same if I had one of those old leases from 06 due to expire 11/2011 and the gas company is now asking me to sign again ? According to the most recent info I have the well in my unit is scheduled for this year,but we all know how that scheduling goes.

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Permalink Reply by scott snow on February 16, 2011 at 1:49pm

It's really a schedualing issue.  They base it on when larger leases expire and land they wish to hold by production, drilling a unit and filling a unit declaration... The fear in not taking a renewal or extension is that they may decide to drill and file the unit delaration with the county and hold your property or exersise the automatic extension clause that probably exists if the original lease is 2006.  The extension would allow them to extend you at the same terms, years and money as the original aggrement.   Yes the bonus money would generally be included.

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Permalink Reply by Bryan D. Huwar on February 17, 2011 at 3:28am

Generally speaking, I would say that you want all of the same terms in a lease/addendum that you would otherwise whant if you were doing a normaly lease that included surface activity.  The suggestion above re water testing is a very good one, too.  A good point is also made above re a subsurface easement vs. a no-surface-activity gas and oil lease.  With the former you're (in all likelihood) not included in the unit because it's not a lease, and thus, you wouldn't receive a bonus payment or your proportionate share of the royalties.  With the latter you would enter a true lease that bans surface activity, however, you would/should/better receive a bonus payment and your proportionate share of the royalties in the production unit.  It sounds to me if you sign the subsurface agreement (which is probably really a subsurface easement or right-of-way) you are going to have the screws put to you and be left out in the cold - and given your geographic location in the unit there would be a high probability that it would be permanently.  If might very well be permanent because if they get your written (and ultimately recorded) permission to drill under/through your property, then it would be VERY unlikely that they're going to go back and want to enter a lease with you because then they would have to pay you a bonus payment and then also divide the royalty up between another slice.  As far as a new lease, if you're just looking for some same addendum language or a sample lease to start, then I'd be glad to just share some samples I have with you.  Good Luck!

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