Many friends and neighbors are talking about drilling leases. I have had several clients bring them to me and have had dozens of people ask in general terms what they should say. My best advice is to get an attorney and ask him or her to review your lease. Even before you speak to an attorney, however, here are some things to keep in mind before you sell any rights to your property.
You own your property and are not required to sell any part of it. That makes EVERYTHING negotiable. You may negotiate initial price, royalties, quantity of land, and everything else. One of the best ways to put yourself in a good negotiating position is to speak with your neighbors and negotiate as a group.
Make sure you are only selling the rights to oil and gas unless you intend otherwise. If an energy company has approached you about drilling for oil and gas, there is a no reason to give them the right to anything else. We cannot know today what might be valuable in 20 years, but do not sell it!
Every lease should protect the landowner from any and every activity associated with drilling or their equipment. This includes not only fixing problems with water and livestock, but should cover injury and property damage.
Keep in mind that the terms of a lease are only those items written within a lease. A separate letter or a person’s promise are likely not legally binding. If there is a disparity in what you were told and the language that shows up in the lease, there is a problem.
Finally, before you sign make sure you understand what you are giving up. Most of the standard leases that I have seen actually restrict how you may use your property. Furthermore, they are designed to operate very long term and are nearly impossible for landowners to cancel. Once an agreement like this is signed, the landowner is stuck. Therefore, getting the terms you want before signing is critical.
In general, many of us believe the new drilling interest in Ohio is great and is a revenue opportunity for land owners. Make sure you are clear on what you are giving and what you are receiving. Do not be afraid to negotiate with the company because they are big. If they did not want the right to use your land, you would not have received the initial contact.
This column does not seek to provide legal advice. Neither Tommie Jo Marsilio nor the Villager are providing legal advice to readers. This column is for education and entertainment only. The advice of an attorney or other professional should be sought regarding any individual situation or legal question.
