On November, 23rd 1931 my great-great grandparents leased the oil and gas rights on two parcels of our family farm. The lease was a simple one-page lease assigning all oil and gas below the ground…very basic, but eighty years and six generations later still intact. There were two wells drilled - one on each parcel of land. The wells are now owned by a company in Birmingham, Alabama, and the deep rights below those wells are owned by a company based out of Oklahoma. No royalties are paid out or have been paid out in over a half century. Both wells are still legally owned by these companies today along with every drop of oil and gas below them to the center of the earth. All based on that one-page lease family members signed eighty years ago.
Today landowners are still signing leases and will continue to sign leases…it is a fact of life, and it is not going to change. What does need to change is the type of leases they are signing. Lured in by huge signing bonuses, most landowners have no idea what rights they are giving up, or the enormous consequences they and their families will have to live with for years to come. To put it simply, these leases last lifetimes…generation after generation will be held by these leases. Today’s oil and gas leases are not your one-page lease of years ago…they are multiple pages with language only an experienced oil and gas attorney can truly understand.
With the recent drilling boom occurring in the eastern part of the state and heading westward several landowner groups have been organized. The main focus of these groups is to help level the playing field between landowners and the oil and gas industry. The landowner group I’m associated with is the Killbuck Valley Landowners’ Association. We are an indigenous group of landowners from Holmes County and northwestern Coshocton County. Our mission is simple: We believe that by educating and organizing as many of our neighbors as possible, they, along with their neighbors, will be able to obtain the best possible compensation for the natural resources that are beneath their property as well as the most stringent protection of our environment. Experience indicates that gas producers are willing to make binding commitments to protect the environment when bargaining for a large block of acreage. There is strength in numbers.
There has been much media press lately on the pros and cons of the recent shale drilling taking place in the Appalachian Basin. Landowners thinking about leasing need to educate themselves on the topic from multiple sources. There has been great concern and confusion about the confrontational and often exaggerated rhetoric surrounding issues related to horizontal shale drilling. Get the facts, do your homework, and don’t sign anything without an experienced oil and gas attorney looking over the lease.
The silver lining I see in all of this is the potential it has in stemming the tide of land fragmentation. All one has to do is look around at all the farms that are being parceled off and sold. In most cases the farms have reached the generation that can no longer afford to keep them, or whose priorities are to sell them, take the money and run. With the potential of large and long lasting royalties landowners may now think twice about selling off the farm in multiple parcels. Instead the next generation may no longer have the excuse that the old family farm is too much of a financial liability to keep. Hopefully they find the opposite to be true…the old family farm is too valuable to let go.
Only time will tell how all of this will play out. As a landowner keep your options open, and again, don’t sign anything without first getting legal advice.
Sincerely,
Bob Hunter
