I and siblings being courted for well drilling, oil lease rights etc-what good, bad and ugly or beautiful should we look for in contractlease offerings?

I received a cold call from a person representing a company local to our family farm where other nearby wells did produce back in the '70's, but not on this property. That being said, supposedly they have permission to drill two other nearby wells on adjoining farms and are contacting us incase one or both of those produce, to see about drilling on our farm.


1) Is it more wise to wait, until local production is known to give us better bargaining position?

2) What should we watch out for in:

A) General

B) perpetuity clauses

C) easement/right of way rights

D) Storage

E) Royalties/payments from lessee or purchaser and percentages thereof

F) Land/site caretaking responsibilities

G) Right to resell lease/well/etc

H) Limiting types of resources extracted/manner or type of extraction

I) Not engaging arbitrary lease contracts that seek all oil/gas/mineral lease for the entire property, for unspecified time periods, and manners that could destroy the ability of the farm to be farmed

J) Things I have no clue about- we do not reside there all the time-are calibrated flow meters required?

Tags: contract, easement, extraction, gas, lease, of, oil, owner's, perpetual, responsibilities, More…right, rights, royalties, storage, way

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Jim, it would help members who may wish to offer advise to know additional information. The state in which your mineral interest is located.  The section-township-range if in LA. or the survey name and number if in TX.  The company that is making the lease offer.  The specifics, if any, of the lease offer.  The approximate number of acres to be leased.

And, is the drilling for the Haynesville Shale, or some other formation?

Replies to Henry and Skip Peel- Thank you for your responses- I have no contract or lease "in-hand" , I only have the cold call info. The Land is not actually in LA- In seeking diversified responses, I sougt outside the "local box". The Land in in W/NW KY bordering the Ohio RIver. There oil and some gas was drilled/mined (some still is) but on neigboring farms. THe specific spot requested leaves me in doubt of sincerity of actual oil productions vs the advantage gained by the right of way and easement that are likely to be sought- I bring this up, because, in addressing roads, utilities and a US highway constructed across our properties, it came to light that there never were any rights of way/easements granted, in direct violaiton of US Constitution, and no one had authority to sign a perpetual occupation, lease until we inherited said land. Upon my administration of part of it, found that county had been charging multiple owners taxes for the same lands and had also mis-deeded lands away without legal consent. This has been addressed to DOJ, COngress, Senate and others, but so far, because of the legal implications for other landowners/(liability) being alerted of illegal taking of lands for public use (without ANY documentation) and the nonexistent statute of limitaitons for inalineable rights of contitution violations...we have yet to have legal resolve but have been ordered and influenced to sign away our rights for nothing. So, being that as there may well be oil there, but, or eslsewhere on the property, a blank lease reservation would seem to indicate another major motivation, especially in the location sought by the highway with no legal documents of right to possess, but, in not being judgmental, if their offer is in good faith and intention, that is why I am seeking data as to inteligent decisions and information to relate to my siblings, that we not damage the land, beneifts or rights thereof during our tenure as owners.

Jim, mineral law varies significantly by state.  And many questions are best answered in the context of the specific locale and play dynamics.  I suggest that a better site on which to seek your answers is Keith's GoMarcellusShale.com  Good Luck.




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