Aug 10
3
Gas Lease Tips
This region has boomed with gas drilling. At the center of this opportunity for gas companies and property owners are property rights and contracts. When approached about a gas lease, here are a few things to remember:
1. There is a difference between natural and methane gas. Natural gas is owned by the property owner unless it was reserved by a prior owner. Methane gas is owned by the owner of the coal rights. Only a title examination can identify the precise owner of the coal or gas rights.
2. You can reserve the right to approve the location of the wells and pipelines on your land. You can also limit the number of wells and approve the location of access roads may be required.
3. Don’t tie up your property with a lease that may not be drilled for years. You may demand a lease provision that will cause the drilling to start soon while receiving a “minimum” royalty. Contrast this to “advance” royalties which are amounts paid today that will be deducted from actual royalties earned later.
4. It can be required that the land is contoured and presentable post drilling. The lease should contain a provision to ensure this.
5. Pooling gas from various sites means gas is stored for a later date. Your gas royalty may not be paid until the gas is removed. You may be entitled to a percentage of royalties based on the number of acres you own compared to other property owners pooled with your gas.
Gas wells can be advantageous for a property owner if the terms are reasonable. Leases, like most contracts, should be reviewed by your lawyer before signing. Have someone with your interests at heart review and negotiate the terms that are best for you.
Keith A. Bassi, Esquire
President and Managing Director at Bassi, McCune, & Vreeland, P.C.
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