Oil and Gas Leases
There can be a number of issues involved with an oil and gas lease depending on the mineral owner's situation. The three main issues are the amount of royalty payable if there is production, the length of the primary term of the lease, and the amount of bonus payable for signing the lease. The bargaining position of the mineral owner and the ability to negotiate these three main issues depend on the area where the minerals are owned, the companies that are taking leases in that area and success of any wells that have been drilled in the area.
Every mineral owner's situation is unique. We try to tailor our services in a cost-effective manner to meet the mineral owner's situation. While many leases are similar in general terms, every lease may also include terms and conditions that do not fit a mineral ownerâ€™s situation or address specific concerns. Some very common items reviewed are the nature of the rights under the lease, whether a Pugh clause is included to prevent undeveloped minerals from being held by production, whether there is a limit on the gas shut-in clause, whether a warranty of title is being requested and whether the lease includes language to try to limit the duties of the oil company for damages caused by its operations.
A lease for a mineral owner who owns surface should address some concerns regarding development about which an owner of minerals only may not be concerned.
Over the past five years, we have seen leasing constantly evolve and it can change from one month to the next. We can offer our observations and experience to guide the mineral owner in selecting a company to lease to. We are also familiar with many of the brokers and companies that may be leasing in your area and can assist you in obtaining a competitive offer for your mineral lease.
We also assist mineral owners in establishing a plan for the minerals to pass to their spouse and heirs, and we often suggest appropriate worded trusts to assist the owner and their family in providing an orderly plan to see that their concerns are addressed and their desires can be met.