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Leasing information to help out mineral owners.

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A Petroleum Landman calls you, sends you out a letter and/or knocks on your door. He presents you with an oil and gas lease and informs you that the company he is representing and/or works for found that you own mineral interest in a tract of land. The question everyone ask is how and where did you inquire this from? The Landman explains that his company found this through a title abstract passed down from an heir (from generation to generation). Now, it’s up to you, the mineral owner to decide the next move. You can read the lease or have the Landman explain the lease and why you should sign the lease. Any time you receive legal papers, people will tell you to “take it to an attorney “. What if you can’t afford one? Well, we’re here to help. 

 

If you don’t feel comfortable dealing with the Landman, please give us a call. We will represent you and let us deal with the Landman. If you decide to do it on your own, here are a few questions to ask the Landman. 

 

First, always ask for proof of title from his company showing what you own. 

 

Second, always ask for the Landman to show you a map of what they’re developing and/or a proposed unit map. If the Landman tells you that you’re in a unit, it is very important to see that unit map. 

 

Now for the good stuff. Never sign a lease right away as the Landman presents it to you. There is a lot of information that needs to be taken out and/or modified. 

 

NOTE: It is very important to get a “Paid up oil and gas lease”. Never sign a delay rental lease. You'll also want a MARCELLUS SHALE ONLY LEASE.  NEVER sign away all DEPTHS!

 

Here are the modifications that will protect you. Please feel free to copy and paste these addendums.

  • AGREEMENT SUPERSEDED.  In the event of a conflict between any of the terms and provisions contained in this ADDENDUM and the other terms and provisions of the Lease, the terms and provisions contained in this ADDENDUM shall control.

     

  • SEVERABILITY. If any clause or provision of this Lease is declared by a court of competent jurisdiction to be invalid or unenforceable under then current laws, the remainder of this Lease shall not be affected thereby, and this Lease shall be modified so that in place of each such clause or provision of this Lease there will be added as a part of this Lease a legal, valid, and enforceable clause or provision as similar in terms to such illegal, invalid or unenforceable clause or provision as may be possible. 

  • WARRANTY OF TITLE: It is understood that Lessor warrants title to said property only with respect that the title is good to the best of Lessor’s knowledge and Lessee agrees that no claims will be made against Lessor pertaining to warranty of title.

  •  INDEMNIFICATION. Lessee agrees to indemnify, protect, save harmless and defend Lessor, their successors and assigns, from and against any loss, claim or expense, including without limitation claims for injury or death to persons or damage to property occurring as a result of Lessee’s use of the Leased Premises, or as a result of loss, expense, injury, death or damage, which would not have occurred but for Lessee’s use of the Leased Premises, except to the extent any such damage or injury is caused by Lessor or Lessor’s employees, invitees or agent’s negligence    

  • HOLD HARMLESS: This will protect and save and keep Lessor harmless and indemnified against and from any penalty or damage or charges imposed for any violation of any laws or ordinances, whether occasioned by the neglect of Lessee or those holding under Lessee, and Lessee will at all times protect, indemnify and save and keep harmless the Lessor against and from any and all loss, damage or expense, including any injury to any person or property whomsoever or whatsoever arising out of or caused by any negligence of the Lessee or those holding under Lessee.

  • DEPTH LIMITATION CLAUSE: Notwithstanding anything to the contrary herein, this lease shall be limited to Marcellus shale depth (hereinafter “leased formations”). Parties hereby agree that the rights granted to Lessee shall specifically include the right to penetrate and drill through all depths and formations from the surface to the Marcellus shale formation. The said lease will only cover the development of the Marcellus shale formation.

  • ROYALTY: All references made herein to one-eight (1/8th) royalty shall be amended to Eighteen Percent (18%) gross royalty.

  • ROYALTIES WITHOUT DEDUCTION: All royalties due hereunder shall be based upon the gross proceeds received by Lessee for all oil, gas, and the constituents thereof produced and sold from the Lease, without deduction, directly or indirectly, for the cost of producing, gathering, separating, treating, dehydrating, compressing. processing. transporting, and marketing the oil, gas and other products produced hereunder to transform the product into marketable form. The royalty paid hereunder shall be subject to a deduction for its proportionate share of any production tax and/or severance tax.   NOTE: Make sure you get out any and all post-production costs. You want a cost-free lease. For example, 18% royalty with post-production will leave you with around 10% after all costs are deducted. You want gross at the wellhead with no deductions to get paid the full 18%. 

  • RELEASE OF LEASE: At any time that this Lease is terminated, for any reason by either party, or if Lessee surrenders or releases this Lease, Lessee shall, upon the request of Lessor, provide to Lessor a termination or surrender of Lease in recordable form.

  • PUGH CLAUSE: Notwithstanding anything to the contrary in this lease, all portions of the Leasehold Premises not included in a unit created either voluntarily under the terms of this lease or by government authority either containing a well that is capable of producing in paying quantities or upon which drilling operations have commenced, shall be released at the expiration of the primary term of this lease. Should the unit as established either voluntarily under the terms of this lease or by government authority be changed after expiration of the primary term, all portions of this lease not included in the newly prescribed unit created either voluntarily under the terms of this lease or by government authority will be released.

  • SHUT-IN LIMITATIONS: Lessee agrees that the shut-in royalty payment will be $25.00 per net mineral acre, per year. Notwithstanding anything to the contrary herein, it is understood and agreed that this lease may not be maintained in force for any one continuous period of time longer than five (5) consecutive years after the expiration of the primary term hereof solely by the provisions of the shut-in royalty clause. 

  • BONUS PAYMENT. Lessee shall make a bonus payment to Lessor in an amount equal to Five Thousand and Five Hundred Dollars ($5,500.00) per net oil and gas mineral acre.  Note: If you use this clause, the bonus may be different on negotiations with the company.

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  • BONUS: To be paid within 60 calendar days from the date of the signing of the Lease by Lessee and Lessor. If three-year extension is exercised, payment of additional bonus is to be paid before the end of the primary term.

  • GAS STORAGE. Notwithstanding anything to the contrary contained in the Lease, Lessee is not granted any right whatsoever to use the Leasehold, or any portion thereof, for gas storage purposes.  This Lease also does not grant any right to dispose of any saltwater or other substance beneath the leasehold premises for any purposes without the Lessor’s written consent. Most leases today have taken out gas storage but it’s always safe to put this in to protect you. 

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  • NO EXTENSION. Most leases will read a 5 year with the option to extend 3 years. Taking the extension out will allow you to renegotiate terms and bonus if the company doesn’t drill in the 5 years of holding the lease. 

  • NO COALBED METHANE: Notwithstanding anything contained herein, this Lease shall not include the right to produce coalbed methane.

  • COMPLIANCE: Lessee’s operations on the said land shall comply with all applicable federal and state regulations

  • AD VALOREM: Lessee agrees to pay a proportionate share of any increase in ad valorem taxes assessed against the leased premises, which is based upon the value of oil and gas production from, or reserves under, the leased premises.

  • NO DISPOSAL OR INJECTION WELLS: The Leased premises shall not be used for Disposal and/or Injection wells and any reference to Disposal or Injection wells in the Lease are hereby deleted.

  • NON-SURFACE. No well shall be drilled on the Leased Premises, nor shall Lessee enter upon or install any installation of any nature whatsoever on the Leased Premises, without the express written consent of the Lessor.  This Lease is granted for the sole purpose of permitting Lessee to unitize the Leased Premises with other leases or properties which shall bear all the burden of surface development.  Lessor understands and gives consent that, due to directional or horizontal drilling originating from surface entry on a parcel not owned by Lessor, the wellbore may pass through or terminate below the surface of the Leased Premises. 

  • ASSIGNMENT. Lessee agrees that this Lease will not be assigned to any company or individual without providing written notice to the Lessor.  Lessee shall not be required to provide notice of assignment to Lessor in the event of an assignment by Lessee: (a) to an affiliate, subsidiary, or internal partners; (b) in consequence of a merger or amalgamation; or (c) of all or substantially all of its assets to a third party.

If there is a RIGHT OF FIRST REFUSAL and PREFERENTIAL RIGHT TO PURCHASE O&G INTEREST AND/OR RIGHTS in the lease, make sure you have the company remove it. This allows you to top lease and sell your minerals to anyone who makes an offer.  
 

If you own surface and minerals together, please contact us. We have a lot more addendums to add with surface agreements. Please feel free to email us at info@appalachianmc.com or call us at 724.209.8487