Oil and gas leases are something that may not be familiar to many outside the oil and gas industry; however, the leasing process is something every property owner should understand. Oil and gas leases involve a landowner granting permission to an oil or gas company to harvest any mineral deposits contained under their property and for which they are paid as a result. In actuality, there is much more involved than simply signing a lease. There are many experienced oil and gas attorneys who can help clients handle such matters before committing to any type of written contract.
What is an Oil or Gas Lease?
Landowners often learn that natural resources have been located underneath their property from an oil or gas company. A contract is offered by such companies to the property owner that allows that company to extract designated natural resources from beneath the property to be sold. In return, the oil or gas company will share a portion of the proceeds with the property owner, which can be very profitable for both the property owner and the energy company. An oil or gas lease contract should be overseen by a law firm experienced in oil and gas leases, to protect the rights of the landowner.
Natural Resources Lease Contracts
Attorneys who are familiar with oil and gas leases caution that every leasing situation is different and each case should be individually handled in order to properly cover every concern relating to each owner and their respective individual property. With the assistance of lawyers who regularly handle oil and gas lease contracts, landowners’ rights will be protected in any contract that is signed.
What Questions Should Be Asked About Oil and Gas Leases?
There are definitely important questions that an oil and gas lawyer will cover in preparing a contract to lease mineral rights on behalf of their clients:
- What is the specific product to be extracted?
- Which exact portion of the property will have the product extracted?
- How does the company intend to use the product?
- What price will be paid to the landowner for the designated product?
Lawyers experienced with mineral rights and oil and gas leases advise that it is essential to determine what type of lease the company has in mind – such as paying for the product as is, royalties only, any bonus payments being offered and on what terms, and what the length of the lease will be.
A property owner should also know if the company intends to build a well on the property or put in transmission lines above ground; if so, where and how will this be done. It is also important to know if the company plans on storing material on the property. These, and many other questions, must be answered before a property owner signs any kind of agreement. All of these aspects of the leasing process are confusing to most property owners, which is why it is important to have a qualified and experienced attorney available to ensure that property owner rights are protected when granting a lease to extract their oil and natural gas reserves.
Property owners fortunate enough to have a reserve of oil or natural gas on their property can experience the benefits of such assets by allowing an oil and gas company to harvest those resources. Seeking the help of a law firm experienced in oil and gas leases is the best way for a property owner to protect their rights and receive a fair share of the proceeds.