|Pennsylvania Marcellus Oil & Gas Leases
Marcellus Shale Natural Gas Leases In Pennsylvania
Pennsylvania farmers and other landowners have been caught up in the rush to lease to natural gas companies and are being presented with complex leases with far reaching consequences. Many of the leases as written by the gas companies contain language that provides minimal protections for landowners while providing many favorable provisions to the gas companies.
When presented with these leases, most landowners find them confusing and do not know where to turn. Let our lawyers help you review and negotiate your Marcellus Shale gas lease. Your natural gas deposits are very likely the most valuable asset that you own and leasing your rights can have generational impact on your property and your wealth. In Potter County, McKean County, and Tioga County and North Central and Western Pennsylvania, we have many unique natural resources that have gone virtually untouched. These resources must be protected and can be protected through appropriate addendums to the standard gas lease. At the same time, adequate consideration must be given to economic development and wealth accumulation and preservation. An unfavorable lease can tie up land for an indefinite period of time without providing adequate compensation.
Gas leases typically provide for a primary term of five years during which the lessor is paid bonus money to sign the lease and for the lessee gas company to develop the land for the production of oil and gas. If during this five year period the gas company "commences operations" to make this a producing well, then the gas company can hold the land indefinitely. If the gas company is not producing oil and gas, then your land can be held under this secondary term indefinitely and without the payment of royalties to you. Therefore, the way "commencement of operations" is defined and the length of time that your land can be held without payment of and money are critical terms that must be addressed.
Another important concern is what happens if part but not all of your land ends up put together in a unit pool with other landowners and there is a producing well. For the sake of example, assume that you have 200 acres covered by the lease and only five acres ends up in a unit pool. Only five acres of your land will produce royalties for you while the remaining 195 acres is held under the lease forever without producing income for you. To avoid this scenario, you must negotiate a Pugh Clause, which generally provides that if some but not all of your land is held by production, the remaining land is released from the lease or you are given a yearly rental until it is put into production.
These are just a few of the myriad of issues that can arise during negotiation of a Marcellus Shale gas lease in Pennsylvania. To protect yourself, you should become knowledgeable about these issues and consult with an oil and gas attorney.
Feel free to contact our firm for a review of your Pennsylvania oil & gas lease.
From offices in Coudersport, Potter County, Pennsylvania, Ross and Ross, LLC serves the personal injury, bankruptcy, social security disability, divorce and family law needs of Western, Northwestern, Central and North Central Pennsylvania including the communities of Coudersport, Galeton, Shinglehouse, West Branch, Smethport, Port Allegany, Bradford, Roulette and Wellsboro, as well as Potter County, McKean County, Tioga County, Bradford County and other areas of Western PA and Central PA.
***Legal Disclaimer: The contents of this site are for informational purposes only and do not constitute legal advice. No lawyer-client relationship exists until one of our attorneys meets with you and agrees to accept you as a client.