surface use agreements

Can anyone help us out with this?  We are trying to negotiate a lease and have been told by others that we should have a surface use agreement seperate from our mineral righs lease.  the company is saying that they dont want to do this as they are pretty sure they will be putting a well on our property so it is a forgone conclusion and they want to lease with the intent to put a well here.

 

Are surface use agreements typically lumped in with mineral rights contracts? 

 

If not, does anyone have a sample surface use agreement they could share?

 

 

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Permalink Reply by Mike Knapp on January 3, 2011 at 6:22am

Rob, There is no reason for you to have a separate surface use agreement.  All of that SHOULD be covered in the lease. 

 

-Mike

Permalink Reply by craig on January 3, 2011 at 8:56am

AND if it isn't covered in your lease to your satisfaction, then by all means use an addendum to make changes to your liking...however there is no guarantee that the company will go along with your addendum(s). or they may lower their offer.  That's my 2¢ added.

 

 

Permalink Reply by Wes on January 3, 2011 at 11:17am

My experience is that there does not need to be a seperate surface use agreement---just make sure that what is included in the lease is not vague and incomplete.  I don't think that most landowners realize how much of their land is allowed to be used when signing a lease. 

What should be seperate is the negotiation of gas storage rights.  The company should pay for any gas storage and that can be provided for in the lease. 

 

Permalink Reply by FXEF on January 7, 2011 at 9:54am

Rob,

Make sure you have language in your lease that will allow you payment for surface usage and damages above and beyond the lease bonus and royalty. Remember, well pads can be 5 acres or more, and roads can consume large amounts of acres also. Once placed on your land you have effectively lost the use of that acreage. If you have a large land tract, it might be in your best interest to seek out a knowledgeable O&G attorney in your state. 

Permalink Reply by Hank zhao on January 13, 2011 at 5:52pm
Mineral right has priority over surface right if mineral developing surface usage is not conflicting with current existing
surface usage.  You can put a surface clause in a lease to set the distance of
Well head to the existing fixtures like house or barn et al, and require pipelines buried in a
Certain depth (usually deeper than plow depth 6-8" if it is farm land).
Building a good road and gate is welcome by surface owners generally.
Putting on a compressor station on your land may cause you noise problem.
You can set some requirements on the lease to limit the noise. The compensation
for the surface usage and damage fee is based on a prevailing market at
different area and different time. You cannot set it in a lease. No one knows when
a well get drilled or if it get drilled. If you own both mineral and surface
right, and if many wells really get drilled on the land, your mineral value
will be much greater than surface value. Think of a surface owner without
mineral right on a piece of tract, the situation is a lot more harsh for him.
Permalink Reply by Richard Fanelly on January 20, 2011 at 5:54am

What language does one use to control compressor station noise?

I have proposed in the lease $1000 per acre per year, pro rata for any portion thereof, for any physical occupation (including roads) of the leased acerage, escalated at the rate of $300 per year as of each fifth anniversary of the lease date; or, a no physical occupation clause. I own both surface and mineral interests. 

Lease termination is another problem. There is no incentive for the lessee to ever release the lease unless you include a significant escalated lease fee in the lease applicable to any time period that no gas is produced from the leased acerage.

Permalink Reply by MICHELLE MILLER on January 19, 2011 at 5:04am

So the ground that they blasted and set aside is the gas companies to take? Isn't this surface usage? And if this isn't in the contract, why shouldn't they pay you for it?

Permalink Reply by Richard Fanelly on January 20, 2011 at 6:03am
Either demand a higher royalty fee (5 percentage points) in recognition of the physical encumbrance of the well and associated facilities on your land, or see my comments below regarding a separate lease fee for physical occupation.
Permalink Reply by MICHELLE MILLER on January 20, 2011 at 6:30am

Our problem is that the gas company already  did a test well.  they left the blasted material over on the side. then when they started to drill on the property next to ours they started to take our material from our property and use it over there on someone elses property.  when we said something to the gas company they stopped taking it. we said we should be compensated for the material they took.  they made an offer of less then a $1.00 a ton. the going rate is $7.50 a ton. we would have taken half the amount if they offered. now it looks like we will be going to arbitration. my thing is they would have had to pay it somewhere else plus hauling and man labor. also if it WAS theirs, why did they stop and make an offer?  we check our lease and there is nothing to this effect.

Permalink Reply by Paul Martinelli on January 20, 2011 at 6:42am
in my book  that is called theft!
Permalink Reply by MICHELLE MILLER on January 20, 2011 at 6:43am
thats what the lawyer said.
Permalink Reply by FXEF on January 20, 2011 at 11:59am

Michelle,

What kind of material are you talking about? Dirt, soil?

When they drill a well, a reserve pit is required to catch excess drilling mud and fluids. When the drilling process is finished the reserve pits are cleaned out and filled with the dirt that was originally removed to create the pit.

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