What is a Surface Damage Clause in an Oil & Gas Lease

Although it might not be directly noticeable, the surface and its associated rights of a distinct tract of property can be controlled independently from the minerals underground. These right can sometimes be a wonder to an owner that wants to make money by an oil and gas contract. Surface landowners may discover that limitations come up in part because they’re not owners of the minerals underground. The following article will describe a few of the challenges that arise with surface and mineral titles involving gas and oil operations.

1. Surface Damage Payments

A surface destruction clause is generally applied if the landholder manages the property for agricultural or added income-producing reasons. A lot of gas and oil businesses repay partners for the modified productive range as the owner uses the property for pasture, timber, crops and so on. An external appraiser can be utilized to estimate the value. Sometimes owners and gas firms have differing viewpoints when it comes to this, so this allows any bias to fall away.

2. Location approval

At certain periods it’s reasonable for a landowner to fix the authority of an endorsement on the definite position of surface production operations or drilling. You’ll see location approval clauses in leases when they are more extensive tracts of property. The gas and oil company along with the mineral owner both agree on the position of drill sites, pipeline easements, access roads and more. On smaller plots, this is tricky to negotiate. Operators will frequently prefer a well site placement based on a geologist’s instructions.

3. No Drilling Within XXX Feet

Just like the location approval clause, when people apply this particular clause it’s by an owner who doesn’t need a pipeline, well, road or any other similar facility installed inside a selected range from the well water, house, septic system, pond, or what have you. It’s a good practice to base the distance on discussion among an oil company and owner in good faith. These usually are outlined in a way which the company needs to acquire the signed consent of the landholder to build anything within the designated length.

4. Water-Related Clauses

Water is necessary for production and drilling of both gas and oil. The owner and the gas company should consider the supply of the on-site water reserves. Clauses surrounding water concerns are fundamentally intended to preserve the water of the owner. The gas and oil company typically tests the water reserves before and after the drilling of a well. These days, water problems are being discussed proactively in leases. If the water has problems, the gas and oil company will fix the issues, and will often give the owner fresh water at no extra cost. A water-related clause can be incorporated to confront the difficulties associated with water usage.

5. Land Reclamation

This clause is seldom added to the lease, hence not expecting a separate amendment. It states that the gas and oil company allow the restoration of the property to its original state before drilling. Taking pictures before and after prevents a lot of the drawbacks that could occur.

In the end, there are numerous means by which a landholder can become much more secure as an oil and gas company work with the land. Knowledge, precaution, and third-party advice are vital here. Make sure you start up a dialogue with the property agent regarding surface rights clauses that can be useful in your case. Like always, learn how the laws of your state can help and hinder you.

What is a Surface Damage Clause in an Oil & Gas Lease
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