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Permalink Reply by ShaleAdvice (Steven C. Townsend) on October 14, 2011 at 8:50am

I have a friend in West Virginia that has over 800 acres and the oil company took about 30% of his land....Unfortunately he doesn't own the mineral rights and therefore he has to seek damages.  I can tell his story and how it worked out if you like. 

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Permalink Reply by Finnbear on October 16, 2011 at 2:53pm

Do tell. I have 60 acres that is in the process of being leased. I only hold half interest on 20 acres out of the 60. We have been told that the other part of the 60 acres (the part where I don't have the oil and gas rights) has an ideal location for a well pad. I'm OK with a pad being there IF I'm compensated for the acreage they occupy BUT the lease offers I've seen don't specify that the fee paid for the well pad be paid to the surface owner (me). They say "the lessee shall pay to the lessor" which seems to remove me (the landowner) from the transaction so I'm really interested in what happened there.

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Permalink Reply by George Brown on October 16, 2011 at 3:06pm

I know that in PA, and I believe in most other states, surface rights are superceded by O&G (and coal for that matter) rights. If I was you, I'd try to reason with the lessee to see if they'd be willing to work around your concerns.

I've heard of landowners (i.e. hold surface rights but not O&G), ignorant of the laws that have been on the books for many decades, who make demands and threats when they don't have a legal leg to stand on.  That certainly makes the O&G rights lessee far less likely to negotiate in a cooperative manner.

We can all argue about whether or not surface rights should be superceded by O&G, but the fact is that in PA they are and there is plenty of case law on the books to support it.

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Permalink Reply by ShaleAdvice (Steven C. Townsend) on October 17, 2011 at 2:37am

Actually, the laws on the books support obtaining fair compensation for surface owners.  Take for example...if you own 50 acres and the well pad will take approximately 20 acres or 40% after access roads and the pad is placed, then how much land do you or could you sell should you desire to?  What is an acre of land worth?  They may try to give you 10K for a well pad, but over 5 years how much did they really give you.  You can't market that acreage if you want to sell, can’t use the space for anything else, your still paying taxes on land that is not able to be used.

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Permalink Reply by Finnbear on October 17, 2011 at 2:57am

My concern now is that the leases all specify that the well pad payment go to the lessor who is not the surface owner in my case. The intent of that payment is to compensate the surface owner for the land used by the drilling operation and no longer available for use but the language of the lease does not always direct it to the landowner. It seems to me there is a flaw in the lease language and that it should specify the payment go to the surface owner who actually experiences the loss. With a lease contract, if it is not written in the contract, it is hard to enforce.

How did your friend's deal in WV work out?

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Permalink Reply by ShaleAdvice (Steven C. Townsend) on October 17, 2011 at 3:03am

First of all, you are not a party to the lease.  Therefore, you can't challenge a breach.  Depending on the well, he has 8 now and are about to drill 4 more, we got 15 to 25K per well, plus timber and other damage costs.

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