How Will We Know a FAIR Oil and Gas Lease When We See It/Them?

PART 1 - Intro and definitions.

In Crawford, landowners are being told to wait for the Utica boom to come here, then good leases will flow freely, or similar "wait for better" advice.  While we're waiting, let's discuss how we'll be able to tell if the much-discussed good lease is FAIR.  

The USA is one of only a relatively few places where fairness to the landowner is supported as a cultural, political, and legal concept.  In many less fortunate and free countries, the government owns all mineral rights, and a discussion of a fair lease is not applicable, so let's enjoy the rare privilege of discussing the details of this special freedom of ours!

To start it off, I offer the following definition of Fairness - All participants have equal access to all essential resources and information and have equal opportunity to share in the risks and benefits.  All contracts and negotiations are free of fraud.  For longer term deals, both parties bring a record that predicts they'll behave honorably for the life of the deal.

I also offer the one example I've found discussed in the public domain that appears to be a fair oil/gas lease - The original King Ranch lease, believe it was in 1929.  It met the definition of fairness as follows:

Both parties to the lease had equal access to all required resources - Drilling required space, timber, a few specialized tools, and lots of labor - both parties had similar access to those.  The risks were shared fairly - the driller had a significant risk of dry holes, but had to risk relatively little capital and labor expense.  Over time, the benefits flowed to both parties, the community, and the nation, significantly enriching all, so the level of fraud must have been very low on both sides - (teapot dome came later:-)

So, all you patient fellow landowners, lawyers and reps, E&P folks, etc (yes, even adamant environmentalists), let's discuss the following questions, or any other you may add:

Is there a better definition of Fair, or any details that need to be added?

Which "normal" lease terms are most nearly Fair and which are most one-sided?

Are there any other more recent public domain leases out there that meet the above definition?

How can we re-insert more Fairness into our eagerly-awaited leases?

Why is it so rare to see lease fairness as a discussion topic?

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Replies to This Discussion

2z248p19vqnh9Permalink Reply by 2z248p19vqnh9 on May 21, 2013 at 2:07am

Thanks, Jesse, on this...I couldn't direct him in the manner in which you did.

Bob...in all honesty, I must say here that THEY go to the expense - time, money, * energy to GO to these lengths as WELL...but sometimes NOT in as detailed a manner as should be.

-------------------------

...but, you've always got to figure in 'the end game' - the 'goal'...

YOU have one goal - THEY have theirs - in THAT respect, it IS 'like gambling'. Their 'house' is the well's production. THEY want the 'most bang for their buck' - they aren't 'friends' with their employees. *IF push came to shove - it's 'goodbye, senior' - nice working with you (NOT EVEN in those 'touchy/feely' terms)...it would be "Thanks"/maybe not even that - pass out the checks - and GO! SCRAM - I'm not your mommy.

SO - YOU have to get TOUGH, but 'touchy/feely' thought behind you - and just establish in your mind a 'caveman'/cut-throat *POKER-FACE* mentality in addressing this.

From what I've read that you've written...you have that. Need that 'lizard skin'...be the chameleon, as well - YOU are gonna' be fine. What will be will be, but you are your own 'end-game' in this crap-shoot.

Jesse's last sentence says it all..."Please stop making this so hard on yourself." - it really IS pretty clear-cut & dry. - and Jesse & I 'butt heads' more than don't - so don't take this wrong. I can agree to disagree with the best of 'em. I'll sit down at ANY table...because I AM 'my own house'.

That said - ENDEAVOR. *Here's a better way for YOU to maybe work with this...you 'play cards', right?...do you take the deck, or a number of decks shuffled together & try to mentally 'figure out' the DECK?...NO. It's the dealer, the house, the other player's who are AT THE TABLE - THAT is the table/game that you are playing at.

As one light lights another, nor grows less - so nobleness enkindles nobleness. *Wish I could just simply SAY what Jesse did in the way he did, but I have always addressed matters in MY own way - hope that both thoughts gave you aid in understanding & plan of attack. IF - RKipling.

2z248p19vqnh9Permalink Reply by 2z248p19vqnh9 on May 21, 2013 at 6:44am

The Gas Company Wants to Modify or Amend My Existing Gas Lease: Wha... ...

I know that YOU are not engaged in 'modification' clarity, BUT this gentleman is someone to put in a 'put your hands on it' file - for G/O lease endeavors. Anything I have read from him is 'right on'. GOOD.

As one light lights another, nor grows less - so nobleness enkindles nobleness. HE should write a 'Gas & Oil Lease' book - showing various leases & possible addendums +...like a 'NOLO LAW book - but in G/O Leases. THAT I would get to learn from! Best.

2z248p19vqnh9Permalink Reply by 2z248p19vqnh9 on June 12, 2013 at 4:40pm

How are things going?

2z248p19vqnh9Permalink Reply by 2z248p19vqnh9 on June 15, 2013 at 2:43pm

Bob - you ever get those postcards from CX Energy?...Thought you'd be interested to learn this too...

*CX-Energy makes land aquisition easier | CX Energy - seems to me as this is addressing 'G/O Co.'s to assist THEM in attain 'land leases' in specific areas of interest...and THEN we come to this:

*CX-Energy Current Oil and Gas Leasing Landowner Groups | CX Energy...where the LANDOWNER is addressed on HOW they will be 'gathering the landowner lambs' for the G/O Co.'s fodder?...

Good 'both sides of the fence' strategy...it IS ODD that  when a G/O Company tends to be the DOMINANT PLAYER in the field of choice that it is 'Laissez-Faire' concerning OTHER G/O Co.'s....

Remember how you desire 'fairness' concerning G/O Land Leases?...WELL 'fairness' to the LANDOWNER would be BEST carried out by having avail to a minimum of at 'LEASE' (least...) x3 bids for the land contract to winnow through & fine-comb...won't get that through that CX Energy...THEY ALREADY have the 'G/O Co. 'in the works' BEFORE they scout out/set up as 'lambs to the slaughter'... the landowners FOR the G/O Co. - pretty nifty operation they have planned out, eh? Thought you'd be interested...going good?

FAIR, indeed! As one light lights another, nor grows less - so nobleness enkindles nobleness.

Permalink Reply by Bob Jenness on July 2, 2013 at 2:59pm

If Corbett signs SB 259, ABANDON HOPE ALL YE WHO ENTER HERE!  

For those of you who used to believe "you don't get what's fair, you get what you negotiate", please modify that gem to read "YOU DON"T GET WHAT's FAIR, and YOU DON"T GET WHAT YOU NEGOTIATE, YOU GET WHAT THE FINE STATE OF PA LEAVES YOU AFTER THEY GIVE THE REST TO BIG OIL!

We really need our groups to get off their butts here and make this go away.  HOW ABOUT IT GROUPS???

Permalink Reply by Bob Jenness on July 4, 2013 at 1:11am

At least NWPALG did something:-)  They sent a letter to 500 landowners asking us all to call Corbett.  What I'd really like to see is any landowner rep getting in his car and going to H'burg to camp out at the state house until they get a meeting with Mr. Corbett to tell him that they represent x hundred landowners who all know they're being raped by this legislation. Most Crawford County landowners have made some significant financial commitment to these groups, and this would be a reasonable expectation for constructive use of that commitment.  We sure haven't seen it produce any lease proposals yet.  HOW ABOUT IT GROUPS?????

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