The Gas Company Has Offered Me A Lease Extension For My Expiring Gas Lease: What Should I Do?

Many oil and gas leases throughout Pennsylvania are on the verge of expiring due to the gas companies’ inability to “hold” the property under the lease terms.  Gas companies holding expiring leases are often approaching landowners and seeking an “extension” of the expiring Oil and Gas Lease.  These extensions typically range from six (6) months to two (2) years, but can be for much longer.

Landowners who receive offers to extend their existing Gas Lease should contact experienced legal counsel immediately.  Time is very important in these situations.  The landowner must gather as much information as possible to allow them to make the best decision for their particular circumstances.  Experience is also crucial in these circumstances as an experienced attorney can provide valuable insight to a landowner weighing their options

 

Even though you may be offered a lease extension, if you refuse to sign the extension in a timely manner the gas company will often engage in “operations” or activity that “holds” the expiring lease in order to avoid losing the lease.  I have seen where the lease is “held” within days of the expiration date and the disappointed landowner has lost a great opportunity.  However, on other occasions leases have expired and the landowner becomes a “free agent” to lease the property to any company who is interested.  The key to your decision whether to execute a lease extension rests with high quality reliable information and a complete understanding of the potential consequences of your decision. 

The landowner considering an Oil and Gas Lease extension must gather credible information and seek experienced counsel to consult with them to explore their options and possible outcomes.  As usual, there is not a standard answer for everyone and each case must be looked at individually while using past experience to assist you in the evaluation process.  Far too many times, I have seen landowners decide to “ride it out” without understanding the potential consequences only to have the existing gas lease “held” at the last minute by the gas company. 

I respectfully caution landowners that this is absolutely not a situation where you should listen to your “expert” neighbor or the gentlemen at the local diner offering advice unless that person is truly experienced in working with expiring leases.  This is not the area for the “first timer” as mistakes can costs hundreds of thousands of dollars, and even millions of dollars over time depending on the size and location of the property.

Immediate action will ensure that the landowner will gain as much information as possible to allow them to make the best decision for the property.  Remember, time is critical in these circumstances as extension options are often only available for a short period of time.  If you do not fully explore your options in a timely manner you may deeply regret your decision in the future. 

  Douglas A. Clark, Esq. – Protecting Pennsylvania Landowners

  www.pagasleaseattorney.com    www.pipelineattorney.com

  WVIA Northeast Pennsylvania Business Journal: http://goo.gl/888C0

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Comment by Marc Fournier on January 3, 2013 at 2:03pm

I have a lease expiring in February 2013.  I have received very small royalties from what must be a very small piece of the property that is in a unit. I do not see any clause in my lease that protects me from the company being able to lock up my lease indefinitely if they are paying royalties.  When I say small, I mean that the total acreage is 53 and the acreage affected is less than .5  Will I be able to lease the property again or am I stuck?  Also, the lease is with Chesapeake but the checks came from Fortuna.

Comment by Janice L. Hancharick on November 14, 2012 at 5:02pm

Attorney Clark, the above headline has hit the nail on the head for many counties across PA and NY's Southern Tier.  It's not a surprise that lease extensions can be as tricky as the original documents.  You're right on top, along w/Penn State personnel and the attorneys the university invites to speak along with them ... same issues!  Hopefully leaseholders will focus on the information provided, both by you and at the Penn State seminars being presented across PA this year.  I don't know your exact location, but I am aware of the up-coming Penn State presentation "Already Leased?  What Are My Options? in Coudersport, PA on November 29th @ 6 PM in the Firemen's Meeting Hall, 171  Rte.6W     There is a $15 fee, but it should be worth it if hearing these educators and att'ys speak on the same topic raised in your headline (and in the meeting's title) prevents current leaseholders from making future mistakes. You presented the issue well. The public needs to be aware of this next wave of leasing activity before it catches us unaware.

Thanks for staying in the forefront, and coming online.

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