ASK THE ATTORNEY GENERAL: Someone offered to buy the oil and gas rights of my property - what should I do?
With the increases in oil and gas prices in recent years there has been a renewed interest among oil and gas firms - and even speculators - in tapping energy reserves that may be closer to home, perhaps even in your backyard. Firms have stepped up their exploration and production efforts in many states, including Pennsylvania where the first commercial oil well was drilled in Titusville in the mid-1800s.
The best advice for landowners faced with an offer to purchase or lease the rights to their land is talk to a lawyer. An attorney can discuss your legal rights with you, explain the potential benefits and consequences of these transactions and help negotiate the best deal for you should you wish to proceed with this type of venture. Selling or leasing rights to your land should not be taken lightly because it means giving up the privileges and ownership rights associated with portions of your property. This can affect the value of your property, your ability to sell your home and your land and can give others broad access to your property.
Things to keep in mind
Mineral leases and sales agreements are binding contracts - know your rights before you sign.
The sale or lease of mineral rights is usually filed with the county office where the deed to your property is recorded. This may affect your ability to sell or develop the land or borrow against it.
Exploration and drilling can involve large rigs and heavy equipment. Access roads may need to be installed, areas surrounding any wells may need to be fenced off and contractors, subcontractors and others may come and work on your property.
Do's and Don't's
Do consult a lawyer. If you do not know an attorney specializing in oil and gas law, contact the local bar association for a referral. You may be able to join together with neighboring landowners to pool resources to consult with an attorney.
Do negotiate and get everything in writing. Your attorney can help you include important provisions in an agreement to protect your rights. These provisions can include: a fair sale price or royalty amount - these are always negotiable; an agreement to indemnify you for any harm done to your home, your property or the environment; provisions giving you a say on things like the placement of wells and tanks, and how and when exploration and drilling can occur; and language addressing whether the lease or rights can be sold to other companies without your approval.
Don't be afraid to ask others, including your neighbors and the Better Business Bureau, about the company approaching you. Research the company to see what experience others have had with it and to learn about lawsuits or other problems the company may have had. It is important to know who you are dealing with before considering a sale or lease.
Don't sign or agree to anything without understanding all terms and getting professional advice. Don't be pressured into any deal.
Pennsylvania's Department of Environmental Protection Bureau of Oil and Gas Management - This agency controls permits for drilling and exploration and monitors active sites.
Pennsylvania's Department of Conservation and Natural Resources Bureau of Topographic and Geologic Survey - This office has general information and maps on past and existing oil and gas fields throughout Pennsylvania. http://www.dcnr.state.pa.us/topogeo/maps/map10.pdf
* While these offices may be able to provide general information about oil and gas drilling, they cannot give advice or answer legal questions you may have about your property.