Five Reasons Not To Sign an Oil and Gas Lease

Landowners and mineral right owners easily get confused by the terms outlined in an oil and gas lease, and thus most of them tend to sign the lease even without understanding what it entails. Although it is primarily your decision to sign or not to sign an oil and gas lease, many reasons can prompt you to decline to sign a lease. Here are some of the top reasons as to why you shouldn’t sign an oil and gas lease.

1. When There Is No Attorney Involved

The presence of an attorney is crucial when it comes to signing an oil and gas lease. An attorney will first review the lease carefully ensuring that your interests are well represented before committing yourself to the lease. They are lots of oil and gas firms that approach landowners and lure them into signing a lease even in the absence of an attorney, only for the landowners to realize afterward that they signed a bad deal. Although the cost of getting a lawyer can be costly, it is, however, worthwhile considering that the attorney is there to ensure you get maximum benefits and that the firm doesn’t exploit you.

2. When The Lease Doesn’t Indicate Royalty Compensation

Royalty compensation is among the highly important things that land and mineral right owners need to review before signing a lease. Ideally, royalty compensation is 1/8 although that is negotiable. Again, royalty compensation should depend on the whole property pool. Whatever the royalty compensation is, it needs to be indicated in the lease. Moreover, the lease should also indicate free gas for property owner since free gas needs to be part of an oil and gas lease.

3. If The Oil And Gas Firm Is Rushing You Into Signing A Lease

When a local gas and oil firm seems to pressure you to sign a lease with them, then it is time to refrain from signing the lease. Signing an oil and gas lease is a crucial decision that shouldn’t be rushed, and there should be absolutely no shortcuts. Even when you feel pressured and rushed to sign the lease, remain calm and insist on getting more time to review the lease before committing yourself to it.

4. If There Are Many Companies Interested In Your Property

At times, more than one company may show interest in your property. Instead of signing a lease with the company that approaches you first, wait until other companies have approached you. After that, you can review all the leases and then pick the best deal. You may rush to sign a lease with one company, just to be approached later by another company that is offering the best deal.

5. When Terms Of The Lease Aren’t Clear

Although this seems like an obvious reason for declining to sign a lease with an oil and gas company, it is nevertheless critically important. Considering the lease will be legally binding, and it cannot be changed once signed, ensure you understand all the terms of the lease before signing it.


Signing an oil and gas lease is a crucial decision that every mineral right owner and property owner should make carefully. If you are still not quite sure whether to sign a lease or not, then seek professional guidance to ensure you land a great deal.

Five Reasons Not To Sign an Oil and Gas Lease
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