If your first reaction after being contacted by an oil and gas company about developing the mineral rights on that old bit of family land is to celebrate, you can be forgiven. After all, who hasn’t dreamed of finding a fortune on their property, Jed Clampett-style, at least once?
However, you need to pause, take a deep breath and protect yourself from making any costly mistakes. Remember that this may be a big financial deal for you, but the oil and gas company probably isn’t stepping forward with its best offer just yet.
Here are the next steps you need to take:
1. Call your other family members.
The odds are good that the family land has been shared over the years, so there’s no reason to think you’re the only person who is being contacted. If you and your extended family members band together, you may have much more significant negotiating power.
2. Do some research about the company making the offer.
You may be speaking to an oil or gas company’s direct representative, but you may also be talking to some type of leasing agent or broker. You could also be talking to a middleman who wants to ultimately flip your property up the ladder to a bigger buyer (at a better price). The more you know about the party making an offer, the better you can negotiate from a position of strength.
3. Understand exactly what is being offered right now.
Whether the company wants to buy or lease, you can bet that there are a lot of complicated clauses and terms being thrown around. Don’t let your anxiety over losing the windfall push you to agree to anything before you fully understand it.
There’s no shame in reaching out for legal assistance with an oil and gas development proposal. Doing so early can help you avoid regrets later.