Land Owners: Please be Wise

As a landowner near Sardis, I certainly have interest in the development of our fossil fuels that the new drilling procedures are seeming to provide.   

However, Prior to signing any lease with any company, there are a lot of pertinent questions that all of us landowners in Lee Township should be asking to verify that we are going to actually receive what we are expecting.

The contract that I received from Triad had quiet a few areas of concern. From what I can understand, if the language of these contracts are not written with fair consideration for both parties, then we may in fact not get anything at all.

i.e.;  Who is for financially responsible for any possible environmental damage or EPA fines?

           ( Are we indemnified from possible huge governmental agency fines if the drilling

            company becomes insolvent? )                          

        Are payments to be in cash, or "like kind" ( natural gas) ?   

        What about conditions of the land after they are all done? Will it look like a strip mine? 

        Is there any compensation for pipelines traversing our property? Will they be buried? 

        Civil liability insurance to cover accidents or other ?

        Maximum amount of acreage to be pooled?  ( utmost important! )

        What if they do not drill anything?   Automatic renewal? 

        What if one of the most aggressive drilling companies in the U.S., Chesapeke moves

         into the area or if we are really sitting on  "The new Middle-East"

I understand that they are dangling a big carrot in front of us, but we landowners really need to watch each others back and make sure that we are not going to be taken advantage of in the end.   

 

 

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Replies to This Discussion

Permalink Reply by Faith Johnson on August 16, 2011 at 3:48pm
I have 5 acres unsigned, just found out last week what was going on here in guernsey county cause we live in florida< i am very confused, what are the odds if we sign a lease and we are not in an area they put a well then what?
Permalink Reply by Jeff on August 16, 2011 at 4:01pm
I have those same kind of questions, Some folks in PA have become very wealthy in their situation, but as I understand it, there may not any guarantees of any payment for us past the signing bonus .  I assume that they would place your parcel with other parcels.  A qualified and experienced oil & gas attorney would be a good referral.
Permalink Reply by Faith Johnson on August 16, 2011 at 4:24pm
Ok thank you very much!!!
Permalink Reply by Jeff on August 16, 2011 at 4:36pm
I really do feel that there are going to be some tremendous opportunities, but I want to make sure we are not getting the wool pulled over our eyes. I would like to seem some of the lease language clarified and some competitive bidding before I sign.
Permalink Reply by craig on August 16, 2011 at 5:59pm

Jeff, 

In Pa, and I'm sure Ohio too, half of your concerns are covered by state law.  The others will/should be covered in your lease.....that is the most important part....Make sure you understand exactly what your lease says before signing anything. Also, remember that the real money is in the royalties(if they hit a good well), not in the upfront lease money. I'd rather take less upfront money and a higher royalty % anyday.  If you don't understand your lease spend some money on someone who can explain it to you. 

Permalink Reply by mark o on August 17, 2011 at 1:54am
make sure you get someone who understands the gas business.  there are alot of lawyers calling themselves gas experts and they don't have a clue.  i just read a lease signed by a landowner that was approved by a local lawyer..she signed it.  locked up forever with a pathetic lease!!!  beware!!!
Permalink Reply by Faith Johnson on August 17, 2011 at 5:50am
I am in a group of landowners in the area where my property is in Guernsey county and we have 20,000 acres and they have a lawyer, so i hope they know what they are doing but also trying to find out as much as i can too its mind boggling!!!
Permalink Reply by Bill anders on August 17, 2011 at 6:24am
If "they" includes a lawyer, they are looking to make the most money as quickly as possible and placing as many stipulations that lead you ( the landowners) to use their services down the road.  When lawyers are getting a cut, an automatic conflict of interest is created.  These situations of lawyers getting percentages, or including their own properties within the groups they are representing are being investigated as we speak.
Permalink Reply by Marc on August 17, 2011 at 8:12am
I would suggest everyone be cautious when deciding whether to go with a group and what group that would be. And the more you know the more you can question authority, be it a company or the lawyer saying he's gotten you the best deal and you should just sign.  That said, it's kind of silly to say that lawyers are looking to make as much money as possible more than anyone else. Believe it or not, many lawyers take their ethics seriously and look out for the client first. I wouldn't take it for granted, but ruling it out is equally naive. I'm not sure it's accurate to say that an "automatic conflict of interest is created" by a particular lawyer's fees or because they may be in a position to handle disputes down the road.  The same could be said of getting a trust, will or LLC agreement written.  As for feeds, if they charge you hourly, they have incentive to string things out negotiating for things that are desirable but unlikely to happen.  If it's a flat fee, the incentive is to advise you to sign a form lease for the whatever the initial offer is. If they charge a percentage of royalty, it'll be something else.  Percentage of bonus, again something else.  So any fee structure will create certain incentives.  I don't think it helps anyone to make blanket statements that they shouldn't be willing to pay for help, or scare people off from some of the most knowledgeable people, especially in a situation where there is plenty of money to go around and the hardwork of many people (including a few lawyers) has consistently pushed prices beyond many landowners wildest dreams.  Just my opinion, I believe people can work together, everyone just needs to be informed enough to protect their own interests.
Permalink Reply by Bill anders on August 17, 2011 at 9:09am

My point was, after reading your circular and rambling thought structure.  The "help" many have become equipped with has been less than par to say the least.  

 

If your setting up an estate, you would go to an estate attorney.

 

Getting divorced, go to a divorce attorney.

 

Signing up for an oil/gas lease in the NE, my experience is that anyone with a JD has become an oil/gas attorney.  

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