if you could redo your lease...

Knowing what you know now, if you had the chance to change anything about your lease, what would it be?

I have one i haven't signed yet and plan to meet with a lawyer to review it next week and hope to take notes from those who have been through this process already.

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Permalink Reply by LW on March 22, 2014 at 4:25am

I met with 2 lawyers and read everything possible back in 2006.  Discussed it with my neighbors and researched for months.    My lawyers were not as up to date as they thought, although I had a better deal than most neighbors, and I do have a better lease than the original that gave me options as far as my land use.

Not good enough!

In hindsight, I would make sure I understood everything better  and broke it down for every fine detail.   Everything is covered here somewhere now.    Even though I thought I was understanding of the entire lease at the time, and I had professional help through highly recommended lawyers, I would still devote more time because obviously the landman, the lawyer and your neighbors tell you what you want to hear and maybe it's to the best of their knowledge at the time, but It's forever!     It's time to make yourself crazy with obsessing over your lease before you sign.  After you sign, forget about it.

Permalink Reply by justme1 on March 22, 2014 at 4:29am
I agree...i wish they would write these in English so they are easy to understand
Permalink Reply by Mark McGrail on March 22, 2014 at 4:45am

There are so many issues to be dealt with in a lease. I'll deal with a couple and let others also reply.

First: if you have less than 20 acres you should request a non-surface lease.

If you have over 20 acres then include a clause that gives you the right to approve surface disturbance for well pads roads etc.

Pipelines, and associated work,  should be a separate agreement,

No warranty of title

A true gross royalty clause, no post production costs whatsoever.

No Market Enhancement clause.

Price for commodities sold to be determined the first arms length transaction to an unrelated third party.

The company pays any increase in property taxes and all taxes associated with the sale of products sold.

There are a few for you to consider

Permalink Reply by adam sorell on May 10, 2014 at 2:24am

What company will have no market enhancement clause???

Permalink Reply by justme1 on March 22, 2014 at 4:49am
Thanks. I guess i should have said it's less than ten acres, in Belmont County Ohio, currently has no buildings on it but likely will in the future.

The company who gave me the lease has a well site on the same road as my land
Permalink Reply by Philip Brutz on March 22, 2014 at 5:53am

The Rector 1H well has been flaring since early January.  Would it be a good idea to limit the number of days they can flare without paying royalties?

Permalink Reply by justme1 on March 22, 2014 at 6:01am
Mine is near Rice's blue thunder and then Bigfoot is also close
Permalink Reply by justme1 on March 22, 2014 at 6:02am
I don't know the status of those sites though
Permalink Reply by Jim Litwinowicz on March 22, 2014 at 8:18am

With ten acres, no building, but you plan on building, I would insist on a non-surface lease.  Otherwise, they may run a pipeline or road across it and ruin your plans.  At the least, plot where you want to build and insist they stay 500' from that point.

The industry is constantly changing and it is hard to predict future activities that need controlled.  One development I wish I had foreseen is that a couple companies are drilling on the edge of a unit, drilling one well each direction, and HPBing 2560 acres with one pad.  I would certainly stop that practice. Demand all pads be located in the center of the unit so that 1280 acres is the max HBPd.

Another new development is that many companies are converting all equipment to run of nat gas. Drilling rigs, compressors, frack pumps, electrical generators, and more are all being converted to run on gas from the wells. The trucks that deliver pipe, sand, cement, rock, water, and equipment will soon run on gas as will the earth moving equipment for roads, pads, pipelines, etc. That would add up to a lot of fuel.

I would demand that all gas be metered and the landowner get paid full royalties on all gas produced including that used onsite or off by the driller and/or its subcontractors. Not fair for the companies to get free fuel for all their equipment.

The last suggestion is to require all equipment to be in compliance with the federal Gas STAR program that minimizes off gassing and pollution.  I wouldn't want a tank farm off gassing fumes on a hot summer day.     http://www.epa.gov/gasstar/

Permalink Reply by cj wyalusing on March 22, 2014 at 6:29am

 ABSOLUTLY NO ARBITRATION.

 ONLY GET PAID BY 1 COMPANY,SO YOUR NOT CHASING 20 DIFFERENT PEOPLE

 AND ABSLUTLY NOTHING TO DO WITH CHSP.OUR ANY BODY THAT IS TIDE TO THEM

 NOTIFIY YOU IN WRITING ANY THING THAT HAS ANY THING TO DO WITH YOUR DEED.

AND PUT IN SOME HOW THEY GET FINED, BY YOU FOR NOT DOING IT. AND NOT JUST 1,000.00

HIT THEM HARD LIKE 50,000.00 PER TIME. AND MAKE SHURE YOUR IN A PRODUTION UNIT. AND TELL THEM YOU HAVE NO ILL FEELINGS TOWARD THEM,  THEY CAN THANK CHESAPEKE.THERE IS PROBALEY 100 PLUS MORE THINGS TO ADD

Permalink Reply by Mark McGrail on March 22, 2014 at 9:02am

cj,

Good point; a strong, I repeat, strong hold harmless clause.

Permalink Reply by justme1 on March 23, 2014 at 1:35am

Can you explain what that mean?

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