1.) Not obtaining an experienced oil and gas lease lawyer
As a landowner, it is absolutely critical that you obtain an experienced oil and gas lawyer to assist you in negotiating a gas lease, pipeline right-of-way agreement, or surface use agreement. Since signing an agreement is a life changing event in the landowner’s life, the executed lease may remain in place for the remainder of the landowner’s lifetime and beyond. Any decisions made should be made with the assistance of an experienced attorney. Make sure you ask the lawyer how many oil and gas leases or Pipeline Right-of-way agreements they have negotiated.
The energy companies have highly paid and skilled lawyers working in their favour, which is why this is important to hire an experienced attorney.
2.) Fearing the attorney fees
Many landowners often resist hiring an attorney due to the legal fees that come along with it. This is a common misconception. In most cases, landowners receive a significant bonus check between 45 and 120 days after signing their lease. Attorney fees are typically nominal compared to the bonus money collected by the client.
3.) Failure to understand what is missing in the lease.
Landowners should never sign an oil and gas lease, pipeline right-of-way agreement or surface use agreement without fully understanding it. More importantly, understanding what is MISSING from the lease. As a landowner, you do not have a second opportunity to negotiate a signed lease. Again, make sure to consult an experienced attorney for assistance.
4.) Failure to explore all potential oil and gas leasing options
Landowners often sign leases with the first gas company that approaches them. It is important for the property owner to remain open and explore all available options when considering leasing their land for Marcellus Shale oil and gas rights. Additional energy and natural gas companies can be brought into the equation to negotiate terms. This can lead to higher bonus payments and royalties.
5.) Failure to look beyond the bonus money and royalty percentage.
While it is important to focus on the up front bonus payment and royalty percentage, there are also crucial terms which can affect the landowner in the future. These terms need to be closely looked at. The natural gas companies are aware that landowners will only look at the bottom line and often present leases in favor of the natural gas company. It is important that the landowner recognize this fact and seek guidance from an attorney.
6.) Falling Victim to an Overbearing Landman
Landowners sometimes say they feel uncomfortable and pressured by the actions of landmen pursuing their property. A landowner must never sign an oil and gas lease or pipeline agreement out of fear, intimidation, or pressure. This is when it also comes in handy to have an experience attorney involved. Hiring an attorney can alleviate stress and make the process smoother for all parties involved.
7.) Signing a lease, pipeline right-of-way agreement, or surface use agreement without sufficient property protections.
In most cases, the natural gas company is willing to make adjustments in the form of an addendum to meet the landowners requirements to protect their property. Whether this involves water contamination, environmental concerns, fields and forest preservation, or address any specific landowner concerns. These issues can be negotiated by the lawyer.
8.) Believing the landman is their friend and looking out for the landowner’s best interest.
The landman is often an employee of a land service company who is contracted by a natural gas or pipeline company. Always remember, these landmen are paid to secure oil and gas leases for their employer and don’t always look out for the landowners best interest. The landowner’s decision must be fully informed and be made in their best interest.
9.) Failure to understand royalty calculation language
Landowners often focus solely on the royalty percentage offered and fail to recognize any royalty deductions taken by the gas company. Landowners must fully understand the royalty percentage provision and whether any deductions from natural gas royalties are permitted within the oil and gas lease.
10.) Relying on misinformation
With misinformation surrounding landowners, it is hard for landowners to make accurate decisions based off of false information. It is vital for the Marcellus Shale landowner to determine the reliability of the source of the information they receive. Also, consider the motivations of the persons with whom they are communicating with.