Understand What You Are SigningAuthor: Ron Stamets
So... The landman has plopped down a natural gas lease agreement on the table and is offering you more money per acre than you paid for the farm itself! What to do? Start acquiring information about what it is that he/she is asking of you.
Be aware of these important facts.
1. Whatever you sign is a LEGAL CONTRACT and you will be bound by it's terms.
2. Whatever you are told by the landman, have it in writing. What is orally told to you may change before the end of the day. You are negotiating a potential $million deal. Not buying a refrigerator. Treat your research as such. Or you will discover, as many have already, that the $25 an acre bonus you accepted before fully investigating your deal, was worth $2000 an acre. Many have cashed checks for $2500 thinking this was good "pin money" later to discover, had they done their due dilligence, the check would have been $200,000.00, for the bonus alone.
3. The lease the landman gives you to sign tips the scales completely to the benefit of the drilling company. It is your responsibility to understand completely what benefits the company is giving themselves, or in a best case scenario, you might have a drill rig pull up to punch a hole through your driveway, or front yard.
4. Hiring a general attorney who has not acquired extra education to deal with gas and oil leasing, will provide a limited benefit. The companies are banking on the fact that although a general attorney may be highly skilled in law, a limited working knowledge of Natural Gas Law handicaps his/her ability to tip the balance of control more towards the landowner.
Consult a general attorney for your normal legal issues.
Consult a criminal attorney if you get in trouble with the law.
Consult a gas/oil attorney to negotiate the terms of your lease.
Either join or form a landowners group the benefits are unbeatable.
A Larger contiguous block of land area commands a stronger position to negotiate terms of the lease. The "two heads are better than one" addage is no more true than in considering leasing land for natural gas and oil exploration.
Retaining a qualified gas lease attorney is expensive. $350 an hour is not unusual for the top lease attorneys. Unless you have megabucks yourself, a landowner group can share the expenses. One group with over 500 members is negotiating with not just one, but two of the most highly regarded (and expensive)gas attorney firms in the country.... for about $25 per property owner.
I am not against the gas drilling companies. As a matter of fact, I am thrilled to see such a valuable opportunity happen to so many people. I would just like to see the opportunity be slanted a little more towards the owner of the natural resource.... You, the landowner. Then, we will have achieved a balance of winning for both the landowner AND the company.