Leasing information to help out mineral owners.

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  • AGREEMENT SUPERSEDED.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.

  • 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.

  • ROYALTY: All references made in Paragraph (B) of the section entitled "PAYMENT TO LESSOR’ as to one-eighth (1/8) royalty shall be amended to EIGHTEEN Percent (18%) Get a higher royalty percentage on production. 

  • 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 cost. 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 well head 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. Upon expiration of the Primary Term of this Lease, the expiration of any extension or renewal of the Primary Term, or after cessation of operations as provided herein, whichever occurs last, this Lease shall terminate as to all depths one hundred (100) feet below the stratigraphic equivalent of the base of the deepest formation then producing from such well or wells; provided, however, if Lessee is then engaged in operations on the Leased Premises or on lands pooled therewith, this Lease shall remain in full force and effect as to all depths so long as no more than ninety (90) days elapse between operations.  

  • PRODUCTIVE ACREAGE/DEPTHS/PUGH CLAUSE. “Productive Acreage" as used in this Paragraph shall mean and refer to the acreage in the unit in which the Leased Premises is included.  “Unproductive Depths” as used in this Lease shall mean and refer to all depths one hundred (100) feet below the stratigraphic equivalent of the base of the formation drilled by Lessee in the unit.  During the Primary Term of this Lease, Lessee retains the right to drill and to earn productive rights without any depth limitations.  If this Lease terminates under the terms contained herein, this Lease will terminate as to all acreage in the Lease, except the Productive Acreage, and as to all Unproductive Depths underlying Productive Acreage.  

  • 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 maybe different on negotiations with the company.

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  • BONUS: To be paid within 90 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 salt water or other substance beneath the leasehold premises for any purposes without the Lessor’s written consent. Most lease today have taken gas storage out 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: Not withstanding anything contained herein, this Lease shall not include the right to produce coalbed methane.

  • COMPLIANCE: Lessee’s operations on 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.

  •  INSURANCE.  

a.    Lessee shall carry or cause to be carried throughout the term of this lease insurance providing coverage equal to or better than specified below. Lessee shall have the right to carry deductibles and/or self insure to the extent it is consistent with their risk management program. All costs and deductible amounts will be for the sole account of the Lessee. The required liability insurance can be met under a primary or an excess policy or any combination thereof. 
b.    Commercial General Liability Insurance, including contractual liability, with a combined single limit per occurrence of not less than $1,000,000 for bodily injury and property damage with $2,000,000 annual aggregate limit applicable to all loss of or damage to property; 
c.    Automobile Insurance, including hired and non-owned vehicles, with a combined single limit per occurrence of not less than 1,000,000 for bodily injury and property damage; 
d.    Excess Liability (excess of underlying insurance coverage mentioned above) with a combined limit per occurrence coverage of not less than $10,000,000. 
e.    Upon written request Lessee will deliver to Lessor certificates of insurance evidencing the existence of the insurance required above. 

  • ENVIRONMENTAL STANDARDS. The standards and practices set forth herein shall not be deemed to be the exclusive method and manner of protecting the environment on and around the premises and in the unit, but shall be deemed a minimum and not a maximum.   

a.    Each well site location shall have in place and functioning competently at all times:
i.    Before construction of facilities on the premises or in any unit of which the premises are a part, a storm water management plan if required by federal, state or local regulation.
ii.    Before construction of facilities on the premises or in any unit of which the premises are a part, a spill containment plan if required by federal, state or local regulation.
iii.    Before construction of facilities other than drilling and completion facilities on the premises, a plan of noise abatement if required by any state, federal or local ordinances. 
iv.    Before construction of facilities, other than drilling and completion facilities, on the premises, a plan of vegetative screening, including bushes, shrubs and trees unless waived in writing by the Lessee. 
b.    Lessee shall use best efforts to employ the most up-to-date techniques and technologies which minimize the use of hazardous substances in the drilling process.  All hazardous and non-hazardous wastes will be disposed of properly and in compliance with applicable laws and regulations.  

 

If there is a RIGHT OF FIRST REFUSAL in the lease, make sure you have the company remove it.
 

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

Morgantown, West Virginia 
a West Virginia Limited Liability Company 

Copyright 2020/2021 by Appalachian Mineral Company, LLC | AMCO HOLDINGS, LLC

724.209.8487 
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American Land Title Association Member
ALTA ID:1192609
NARO - National Association of Royalty Owners
Member ID# 57532362