The Importance Of Consulting A Lawyer When Approached About A Natural Gas Lease

Since the early 2000s, landowners in the greater Ohio Valley have been getting approached by landmen with proposals to lease the oil and gas rights underlying their properties. Frequently, these offers are presented in a way that’s intended to create a sense of urgency and facilitate the impression that a decision must be made immediately.  When pressed, landowners typically overlook the fine print of a lease offer and simply asset to its terms in order to get some “free money” for a property interest they otherwise could not have utilized.  Oil and gas landmen prey on this perceived weakness in bargaining power in order to execute leases which convey maximum rights to the gas company for minimal cost.  However, most people do not realize that they are situated in a position of strength with negotiating an oil and gas lease, and that gas companies often include broad terms within their standard form leases that are not essential to consummating a deal from their perspective.

Landmen are usually seasoned and learned deal-makers who a gas company has retained to negotiate on their behalf.   They are well versed in the law and science pertaining to oil and natural gas, and their success is measured on their ability to make deals and obtain rights.  Without making any generalization about the moral character of landmen, the simple fact remains that their interests are fundamentally in conflict with those of landowners.  For this reason, all landowners approached with oil and gas leases should retain the serves of an attorney to protect their interests.  Succinctly, if the gas company has hired its own gun to represent it in negotiations, a property owner is entitled do the same.

If you are worried about whether you can afford an attorney for these negotiations, you should not be.  Here at Bordas & Bordas we step in and negotiate oil and gas leases on behalf of landowners on a contingency fee basis.  A contingency fee basis means that we would take a percentage of the profits from the deal as payment for our services.  We typically do not bill by the hour for these services.  Accordingly, our payment would come directly out of the proceeds we are able to obtain through negotiations.  Furthermore, we perform an initial evaluation free of cost in order to determine whether our services are even necessary.  Our lawyers are experienced in all aspects of oil and gas lease negotiation, as well as all other aspects of property rights. 

In closing, I want to caution landowners about a few things. When presented with an offer to lease the minerals underlying your property, always be mindful of what surface rights you are conveying in the agreement.  In most jurisdictions, gas companies are able to do whatever is “reasonable” to obtain the minerals which they have leased.  However, standard form lease language often expands surface rights well beyond what a private citizen would consider “reasonable” use of their surface.

Additionally, landowners should be mindful of injection and storage clauses in standard form oil and gas leases.  Injection and storage language typically provides the gas company with a right to store gas from other sites in your ground for no extra money.  This language is often overlooked by landowners when negotiating a deal.  Injection and storage activities on your property can result in several issues that landowners do not conceive of when signing a lease. 

For these reasons, it is extremely important to consult a lawyer prior to signing an oil and gas lease agreement.  If you have been approached about leasing your mineral rights, give us a call for your free initial evaluation to examine whether an attorney can help you negotiate the best possible outcome.  

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