Oil & Gas
The Law Firm of Mary Susan Davies helps landowners understand and protect their rights in matters involving oil and gas law, including drafting leases with the goal of protecting the environment and preserving the longevity of natural resources.
Surface Rights vs. Mineral Rights
In Pennsylvania surface rights and mineral rights are treated as "separate estates." It is possible that landowners who own the surface rights to their property may not also possess the rights to the minerals found beneath their land. Instead, these mineral rights may be the property of others and their interests may be best served by leasing those rights to drilling companies.
This severance of rights can result in a great amount of interference with a surface landowner's use and enjoyment of his or her property. Generally, an oil and gas company should provide notice to the surface owner before it commences drilling. If you are a landowner who has received notice of an oil company's intent to exercise its rights to drill on your property, it is important to begin negotiations with the mineral owner immediately. If you fail to negotiate items, such as terms of access, consequential damages to your property, payment for or the right to remove and sell timber, and the ability to use some of the gas on the property, the mineral owner may be authorized to enter your surface and begin drilling, and there may be little, if any, remedy for the damage done to the property.
Ms. Davies provides counsel to landowners and can negotiate all aspects of your lease with the mineral owner. Typical issues may include:
- Easements, rights-of-way, and access
- Timber rights
- Placement of wells and equipment including pipes, tanks, transmission lines, and pits
- Erosion and sedimentation control measures
- Drilling schedules and times other activities should occur
- Privileges to receive free gas for your personal use
In addition to assisting surface rights owners in negotiating oil and gas leases, Ms. Davies also assists landowners who posses both surface and mineral rights in negotiations with drilling companies. Although the concerns are often similar, landowners who possess both rights may confront additional issues when negotiating lease terms for rights-of-way, timber felling and removal, ownership of equipment, and other related issues.
Ensuring Basic Lease Terms
An important aspect of any oil and gas lease involves negotiation for the appropriate payment, including lease bonuses, royalty payments, and potential compensation for use of or damage to surface land. Lease royalties are generally set as follows:
- An equivalent of 1/8th part of all gas produced in exchange for use of the premises, or 1/8th royalty of the market price; and
- An equivalent of 1/8th of the price paid to the oil company for gas marketed off the property per thousand cubic feet, which is measured by specific standards for atmospheric pressures and temperature.
The lease may also include a lease bonus, which is the original consideration for the lease paid by the oil or gas company. It is also important to negotiate terms of entry onto the surface property and any disturbance of the surface land required for excavation and drilling for the mineral.
Representation in Oil and Gas Lease Negotiations
If you are a landowner dealing with an oil and gas company or mineral owner and are considering entering into lease, please contact Mary Susan Davies to schedule a consultation.
