What is an oil or gas lease on your land actually worth?

One of the reasons that Texas is a leader in oil and gas production within the United States is that there are abundant natural deposits of these valuable resources. Oil and gas companies frequently execute speculative leases with property owners to make use of those deposits.

They negotiate to have drilling rights for oil or gas on the property for a set amount of time. The property owner receives a specific amount of compensation annually, usually regardless of whether the company drills or not. Frequently, oil and gas companies are eager to meet landowners in areas that may have resources and will even host special events where they meet property owners and present them with basic leases.

Even if there will still soon be such an event in your area, like a barbecue sponsored by a major gas company, you need to thoroughly review the contract to ensure it is appropriate.

Leases for mineral rights can be difficult to understand

The average individual may have a hard time making sense of the jargon used in a mineral rights lease. Beyond that, their lack of experience with mineral leases might mean that they accept terms that are highly unfavorable. Inappropriately low compensation or terms that might affect the owner’s use of the property in the future are both concerns when negotiating an oil and gas lease.

There is no such thing as a free lunch. There’s a reason that business professionals and lawyers warn people about giveaways and other acts of presumed generosity on the part of businesses. If you attend a meet and greet where oil and gas company representatives provide a meal, the goal of such an event is to get you to let your guard down and potentially agree to something that isn’t favorable for you.

When you have an attorney review the proposed oil and gas lease, you can have a better understanding of what it might mean for you as the property owner and may have an easier time negotiating different terms before you sign. You could end up locked into unfavorable terms for years if not decades if you sign a lease without having a professional assist you in its review first.

Getting the right help when evaluating a potential oil and gas lease will lead to a more favorable transaction for you as the property owner.