Recently, a number of companies have begun contacting landowners in many areas of the state in efforts to lease land for oil and natural gas exploration. Lease bonuses are being offered from $25 to $200/acre. As a property owner, when you read the lease you are offered, do you understand what you have read? What do you need to know to determine if you want to sign a lease?
Some things to consider:
• What does it mean my royalty will be paid based on net income?
• What are the post-production costs the lease mentions? How do they reduce my royalty?
• Is there an alternative to a 1/8 royalty? What royalties do other areas of the U.S. receive?
• What state agency regulates the oil and gas industry to insure the wells are properly constructed?
• Is compulsory pooling a bad thing for the landowner?
• What is horizontal drilling and hydraulic fracturing? Are they safe?
• Does “brine and other chemical disposal” mean there could be an injection well on my property?
• What constitutes “surface damages?” Can I be paid for surface facilities?
• If it’s an oil and gas lease, why does it say “and other minerals and gases?”
• How do I insure the land is reclaimed in the manner I wish?
• Can I charge a fee for pipelines placed on the property? Can I charge for uses of the land surface, other than for the well site?
MSU Extension and the Montcalm County Farm Bureau are sponsoring an informational meeting about negotiating the oil and gas lease and the role of the Oil, Gas and Minerals Section of the Department of Environmental Quality in regulating the oil and gas industry from 6 to 8:30 p.m. on Sept. 6 at the Douglass Township Hall, 3521 West McBrides Road, Stanton. There is a registration fee of $5 per person.
When you sign an oil and gas lease, you have essentially “sold” a part of your property. Obtaining a good lease is a negotiation. Negotiating the lease can result in much more income to the landowner over the lifetime of the lease and insure the land is managed for oil and gas production in an acceptable manner.
An oil/gas/mineral lease is an important legal document that can last for many years. A landowner has one opportunity to obtain a good lease and that is before it is signed. Negotiation of these terms may be a landowner’s first exposure to an oil and gas lease.
The presentation will include speakers from Michigan State University Extension and an attorney that specializes in Oil and Gas Leasing. There will be a question and answer period for the speakers to answer questions.
The meeting is open to the public and although no pre-registration is required if would be helpful in preparing materials to know an estimated attendance number, so we are asking that you contact the MSU Montcalm Extension office at (989) 831-7500 or the Montcalm County Farm Bureau at (989) 831-4094 by Sept. 5. Registration is also welcome at the door.