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Wiley & Mathews

Tips for negotiating oil and gas leases

Ohio is rich in shale, and shale oil can be refined just like petroleum. In addition, the layers of shale sometimes capture large pockets of natural gas that can be harvested and used. It's no wonder that oil and gas companies often seek contacts with landowners that will allow them to develop those natural resources.

However, landowners need to be careful. Oil and gas leases are complex. Many landowners are so caught up in the excitement of a potential windfall that they sign away important rights.

Here are some tips if an oil or gas company is asking for a lease:

  1. Slow down. This is nothing to rush into. No matter what impression the company representatives give you, the deal isn't going to evaporate if you wait a little while.
  2. Ask your neighbors about what they know. You can bet that several of them have also received offers and it is wise to compare them.
  3. Don't forget your surface rights. Any mineral development is likely to leave your land looking ravaged. You need to negotiate with the limits of what you can accept in mind.
  4. Consider other potential problems. Mineral development can pollute your water. Trucks and machinery and power lines may hurt your way of life. Your contract should include agreements that clearly aim to avoid damage and compensate you for accidental harm or make repairs.
  5. Talk about reclamation efforts. When the company is done, you don't want them to simply pull away and leave you to reseed and repair the land.

Remember, no matter how ingratiating the oil and gas company may seem, they are not asking for a lease to do you a favor. They are purely concerned with their own company's financial well-being, which is why many landowners prefer to have an attorney represent them during mineral lease negotiations.

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