Oil and gas leasing activity is still going on at a rapid pace and I continue to be amazed, sometimes appalled, at the variety of lease forms I’m seeing. It seems like every landman and every oil company has their own customized lease form. Some are more faithful to the “tried and true” standard provisions we’ve seen for decades; some can only be described as “imaginative”.
I recently came across some articles that might be of interest to landowners who’ve been approached about signing leases on their land, and thought I’d pass them along: Oil & Gas Leasing: Top 10 Things To Do, Oil & Gas Leases: 10 Common Mistakes During Mineral Lease Negotiation and Oil & Gas Production 101 for an introduction to what’s involved in drilling and producing. Each of the pages those links go to contain more links a person can follow in the process of becoming knowledgeable about the subject. As they say, knowledge is power, and it’s especially important when it comes to letting strangers use your land.
I’m getting more and more calls and emails on account of people hitting the search engines and finding my website. Many of those people are searching for an oil and gas attorney because somebody sent them an oil and gas lease to sign. The past year or so, odds are the lease came from Chesapeake Energy or, more likely, one of its landmen. They seem to have a lot of landmen; sometimes more than one working the same area. Until recently, the leases I got from people were pretty much all the same. The past couple months, though, I’ve seen considerable variety, although they’ve been somewhat consistent in certain key provisions.
With all the Chesapeake leases coming across my desk, I found the recent article about Chesapeake’s Aubrey McClendon on John McFarland’s Oil and Gas Lawyer Blog interesting. People in the oil and gas industry might want to take a look at it. People considering a lease to Chesapeake might also be interested.
When somebody asks me an oil and gas law question, one of my frequent responses (besides the lawyer’s classic “it depends”) is “nothing’s ever black and white in the oil patch except maybe crude and snow”.
I was recently asked how many feet an oil well has to be from a property line. The person asking thought his neighbor’s oil wells might be too close to the line. Here in Kansas, state regulations specify an offset of either 165 feet or 330 feet, depending on the county. Sounds fairly black and white, eh? But I asked, have you looked up the oil lease?
Turned out the property line at issue was between two quarter sections which at one time were covered by the same lease. So, it could be important how one quarter came to be released from the lease. Maybe there was a written agreement with the landowners at the time that waived the offset requirement. It might matter when the wells were drilled, whether before or after the one quarter was released.
It also turned out there’s neither a fence line between the quarters, nor has either quarter been surveyed. A survey might establish the property line several feet from where the landowner thinks it is. Even if there was a fence, it might not be on the boundary line, either by accident or by design and agreement of the respective landowners. If a survey showed a fence was not on the boundary, then there may be an issue as to how long the fence has been where it is and whether “adverse possession” has established a different boundary line than what a survey might show.
I could keep going with this, but I think you get the picture. I just thought this made a good example of how something that looks likes a simple question with a simple answer, isn’t really so simple, in the oil patch. Of course, this isn’t limited to the oil patch; it applies to virtually all areas of law practice. As for whether or not it applies in your case, well, it just depends. 🙂