Replies to This Discussion

Permalink Reply by Steve on July 3, 2012 at 5:21

Get a mineral rights lawyer or hire a reputable mineral agent to make landowner-friendly changes to your lease. He will probably add an addendum that will be more pages than your current lease form if he knows his business. The "standard"lease forms handed out are often, if not always, a form you should not sign.  You can nearly always get a better and fair lease out of them. Without some legal advice you will probably fair poorly. IMO

Permalink Reply by Skip Peel - Mineral Consultant on July 3, 2012 at 5:31

Standard form leases are drawn in favor of the industry.  The form can be amended by an attached "Exhibit A" addendum which modifies the terms and adds others to the benefit and protection of the land/mineral owner.  You can invest time here to learn as much as you can and/or hire an O&G attorney.  Warning: not all attorneys are O&G attorneys and the difference is significant.  The fact is every mineral estate is different and the lease language for benefit of the land/mineral owner is dictated by size of tract(s) and location.  If you wish to receive suggestions as to what you should attempt to negotiate in a lease, the answer to those two questions will help.

Permalink Reply by Robert L Call on July 3, 2012 at 6:36

You probably will not find an attorney in Vernon or Beauregard Parishes that specializes in oil and gas law.  You will probably have to find someone in Shreveport.  Negotiating better terms than the initial offer is common practice.  However, don't demand too onerous of provisions be added to the lease because unless your land is key to the propect the oil company may just pass you by.

Permalink Reply by Skip Peel - Mineral Consultant on July 3, 2012 at 6:58

I agree with Robert regarding O&G attorneys.  Phone and email communication is sufficient to access the expertise needed to get an acceptable lease.  An attorney familiar with leasing in a given play and area will know what is possible and appropriate to the specifics of the mineral estate. 

Permalink Reply by A Thompson on July 4, 2012 at 0:57

Thanks to all of you.  This certainly helps us get started with this leasing process.  Learning a lot from this site!

Permalink Reply by michael on July 4, 2012 at 2:29

best to get an oil &gas attorney to see how you stand on this so the lease will protect you as well.would you mind telling what price per acre their offering so far best i've heard is 2-3 hundred per acre with 20% royalty.thanks for any help.

Permalink Reply by A Thompson on July 4, 2012 at 22:42

20% royalty, which they said was standard.  Original offer was 150/acre, but that's been rediscussed at 250 per acre.  Still concerned about surface vs mineral rights.

Permalink Reply by Skip Peel - Mineral Consultant on July 5, 2012 at 1:33

There is no such thing as "standard" lease terms.  There are 'opening offers' and there are 'final offers' and everything in between is negotiable to one extent or another.  I often advise clients to negotiate a "No Surface Use" clause.  This allows them control of and compensation for surface use.  Many land owners do not understand the value inherent in surface locations for pad sites when drilling is horizontal.  Operators can't put a surface location just anywhere.  Based on the size and shape of the unit, only a few sites are ideal.  Those who own such a site should receive compensation over and above their regular lease terms.  I advise clients to request a No Surface Use clause but to tell the landman they are willing to allow surface use but wish to have some control and compensation for their approval.

Permalink Reply by Andrew on July 5, 2012 at 8:24

Be sure you understand whether they are offering to buy your land and mineral together, or whether they want to lease your minerals with the right to use the surface to conduct operations. My guess is that they are probably offering the second one, which is extremely common. The surface rights part only allows them to use as much of the surface as is reasonably necessary to drill, which is often a couple of acres plus a road. They will pay you damages for any property they use. 

You can refuse to allow surface operations in your lease, but the size of your acreage will determine if they will take that. Ultimately though, your mineral rights are worthless if no one nearby is willing to let a company drill for them.

And of course, all of this is something you should discuss with an O&G attorney in Shreveport or Lafayette.

Permalink Reply by Dion Warr, CPL on July 5, 2012 at 9:31

There are more places to look for oil and gas attorneys than Lafayette and Shreveport.  Lake Charles, for instance.  There was a small firm of fair renown in Crowley for a long time.  That's just a couple of places closer to the area.  Depending on where you live, I could suggest others.