Attorney James Decker’s advice to ranchers entering lease agreements for oil and gas exploration on their land is to have a lawyer with expertise in the subject and mineral rights on your team.
Table of Contents:
When the land man comes to call offering a oil lease for mineral exploration, James Decker’s advice is to make sure a lawyer reviews the paperwork.
“It’s not that expensive to talk to an attorney, and a few hundred dollars can avoid a world of hurt and surprise down the road,” says the Stamford, TX, attorney who specializes in agriculture and oil and gas law.
Decker’s practice, Decker & Arrott P.C., serves mostly rural landowners and rural businesses. “We represent farmers, ranchers and folks who own land and lease it out for production, as well as assist them with real estate and ag law transactions, and oil and gas. I also represent some oil producers and operators as well, so I have experience on both sides of the desk,” he says.
Stamford is a 3,000-population West Texas community situated in the midst of the booming Cline Shale formation.
“We’re seeing a lot of new leasing and exploration of underdeveloped fields and undeveloped production areas. We’re very busy helping landowners with leasing decisions, negotiating prices, oil lease terms, and drill-site locations. We also work to make sure that, as oil production begins or resumes on their property, the landowner is protected and the impacts to the surface use of their property is minimized as much as possible.”
The local boom revolves around a mix of cutting-edge shale drilling and old wells returning to production due to climbing oil prices. “Anybody and everybody in the oil business are looking to expand production right now,” he says.
Decker says the transactions in existing wells tend to be secondary recovery operations typically employing new technologies to extract oil and gas.
“In these situations, the landowner may be subject to an oil lease agreed to decades ago. I’ve dealt with leases from the 1930s and ’40s that aren’t very favorable to landowners in terms of surface use because the language is pretty minimal. So it’s up to the landowner to basically try to work with the reasonable oil producer to get some fair terms for surface use.”
Decker says the landowner involved in an existing lease typically is in a weaker bargaining position because the oil company is essentially just expanding its ongoing activities.
“So it’s up to a landowner to try to get the oil company to treat them right without having to go to court about it. And, for the most part, they do.”
Such an agreement would detail how the oil company can use the leased land, damages to be paid, limits to their activities, etc. Decker says it’s important to have such an arrangement formalized to avoid misunderstandings down the road. A handshake won’t suffice.