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Oil and Gas Lease Pitfalls and Perils – NY Times

by Kenneth E. DuBose on December 6, 2011

A recent article by the NY Times surveyed several thousand oil and gas leases. The Times hasn’t shied away from making accusations about the industry, but the story’s findings should be considered when leasing your minerals.  While many of the problems mentioned are few and far between, you don’t want to be that one land owner that did have problems.

Here are a few of the findings:

  • Fewer than half the leases require companies to compensate landowners for water contamination after drilling begins. And only about half the documents have language that lawyers suggest should be included to require payment for damages to livestock or crops.
  • Most leases grant gas companies broad rights to decide where they can cut down trees, store chemicals, build roads and drill. Companies are also permitted to operate generators and spotlights through the night near homes during drilling.
  • In the leases, drilling companies rarely describe to landowners the potential environmental and other risks that federal laws require them to disclose in filings to investors.
  • Most leases are for three or five years, but at least two-thirds of those reviewed by The Times allow extensions without additional approval from landowners. If landowners have second thoughts about drilling on their land or want to negotiate for more money, they may be out of luck.

You can also read an article done by nytimes.com

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