For some in Ohio it seems a “landman” is at your door morning, noon and night. Offers to lease your mineral rights pour in from large and small companies everyday in your mailbox and on the phone. If you’ve weighed the issue of hydraulic fracturing and have decided to lease, what’s your next move?
Here are some tips to help you navigate the leasing process.
Take Your Time
Although mineral rights leasing in some instances can mean a large sum of cash upfront, you’ll want to take your time settling on the terms of the lease which can last a very long time. Oil and gas companies generally have long timelines for projects, often lasting decades. Don’t be hasty in signing anything.
Hire An Attorney
With mineral rights, it’s a good idea to educate yourself first. Then, when you feel you’re ready to negotiate a lease, it’s advisable to hire an attorney. Attorneys are essential in drawing up contracts, inspecting documents and coordinating negotiations making sure the firm you hire is experienced in mineral rights. Oil and gas attorneys provide information, counseling and representation for landowners.
Consider More Than One Offer
If your property is anywhere near the promising Utica and Marcellus shale beds, and you’ve already been approached by several oil and gas companies as well as real estate brokers, it becomes pretty obvious that you’ll be able to negotiate with more than one company. If a company has approached you, listen to their offer and then approach other companies to see what they have to say. Don’t commit to anyone before knowing what you can get.
Do Your Research
You should know something about both the position of the person who has contacted you and the company he represents. You may be contacted by an employee of the company, a contractor hired by the company to bargain for mineral rights, or a speculator seeking to buy the rights from you and then flip them to another party for a profit. Do as much research into the interested company as you can. Talking to your neighbors and attending some of the many meetings organized by the Ohio Department of Natural Resources can be helpful in educating yourself.
Get It In Writing
Make sure that everything is spelled out in the lease agreement. Don’t assume any area that isn’t covered in the lease agreement, such as damages, rights to the use of surface structures and pollution controls, can be settled outside of a legally binding contract. Ask other mineral rights owners about terms they wish they’d included in their leases.
Comments?
E-mail them to managing editor Abby Cymerman at acymerman@bakermediagroup.com.
History Lesson
The first commercial oil production took place in Ohio in 1860, and natural gas was discovered in 1884. Mineral rights refers to the ownership of minerals, such as oil and natural gas, that are beneath the ground surface. In the United States, a landowner has rights and ownership over the land as well as any minerals found under the surface. The owner, however, can choose to sell his mineral rights and subsurface rights. Because of this, some landowners may not hold title to the oil, gas and other minerals beneath their land. Ohio’s House Bill 278 gave exclusive authority to regulate the drilling of oil and gas wells to the Ohio Department of Natural Resources. Source: Ohio Department of Natural Resources
