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What a Gas and Mineral Lease Really Is

What a Gas and Mineral Lease Really Is

In North Carolina, several bills have passed paving the way for oil and gas companies to drill for oil using a controversial method called Fracking. Fracking involves pumping millions of gallons of a water chemical mixture into the ground to force rock to crack in order to extract natural gas. Oil and gas companies are now approaching landowners with Gas and Mineral leases so that they may “frack” on their land. In many cases, the oil and gas company offers an unsuspecting landowner a large sum of “up-front” money in exchange for a signature. Wilson Law PA urges you to never sign a Gas and Mineral Lease without contacting an attorney. Your own personal safety and the value of your property could be at stake.

Rights vs. Lease
Generally, an individual who owns land owns both the surface rights as well as the mineral rights beneath the surface of the land. However, that is not always the case. Mineral rights can be severed from the surface rights in a land transaction. Therefore, it is possible for a landowner to own the surface rights to their land but not the mineral rights.

For those that do own their mineral rights, oil and gas companies may be interested in acquiring an interest in those rights either through a sale or leasing transaction. Some landowners may simply sell their mineral rights outright to an oil and gas company. This means the company owns the contents beneath the property and has the ability to drill on your land to extract those minerals.

The more common approach is for the landowner and oil and gas company to enter into leasing agreement in regard to the mineral rights. This gives the oil and gas company the right to drill on your land and extract minerals or gas beneath the property. However, the lease only lasts for a specified period of years and the landowner does not give up outright ownership of the mineral rights. To entice a property owner, the oil and gas company will usually offer a large up-front signing bonus hoping that the landowner will quickly sign the lease. Furthermore, the landowner will also get a percentage (royalties) of sales of the gas or mineral should it be of a certain quality.

Leasing Issues
Gas and Mineral Leases include complicated language and oil and gas companies may attempt to take advantage of landowners that may not completely understand the terms. There are not only important financial considerations to consider, but also provisions relating to the disposition of your land. If you are approached by an oil company with a Gas and Mineral Lease, please contact Wilson Law PA for a free consultation before you sign.


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