If you own land in the Pittsburgh, PA area, there is a good chance an oil or gas company has approached you about leasing your mineral rights. The Marcellus Shale formation runs beneath much of western Pennsylvania, and energy companies have been active in the region for years. Before you sign anything, you need to understand what you are agreeing to. An oil and gas lawyer in Pittsburgh, PA can help you review your lease, negotiate better terms, and protect your interests for the long term.
What Is an Oil & Gas Lease
An oil and gas lease is a legal agreement between a landowner and an energy company. The landowner grants the company the right to explore, drill, and extract oil or gas from the property. In return, the landowner receives payments, usually in the form of a bonus payment upfront and royalties based on production.
These leases can last for years and affect how you use your land. They also involve technical language and industry terms that most people are not familiar with. That is why having a lawyer look at the lease before you sign makes a real difference.
Why You Should Not Sign Without Legal Review
Energy companies have teams of lawyers who draft leases to favor the company. The terms they offer are rarely the best you can get. A landowner without legal guidance often leaves money on the table or agrees to terms that cause problems later. Here are some reasons to have an oil and gas lawyer in Pittsburgh, PA review your lease:
Royalty Rates Can Be Negotiated
The standard royalty rate companies offer is often lower than what you can get. A lawyer knows what rates are being paid in your area and can push for a higher percentage of production revenue.
Lease Terms Favor the Company
Many leases include clauses that allow the company to deduct costs from your royalty payments, extend the lease term without additional payment, or drill anywhere on your property without your input. A lawyer can identify these clauses and negotiate changes.
Surface Rights Need Protection
Signing a mineral lease does not mean you have to give the company free reign over your land. You can negotiate where equipment is placed, require restoration of disturbed areas, and set limits on road construction and traffic. Without these protections in writing, you may have little recourse if your property is damaged.
Key Terms to Watch For
Oil and gas leases contain a lot of fine print. Here are some terms your lawyer will pay close attention to:
- Bonus Payment: The upfront payment you receive for signing the lease. This is often negotiable.
- Royalty Rate: The percentage of production revenue you receive. In Pennsylvania, rates can vary widely.
- Lease Term: How long the company has the right to drill. Most leases have a primary term of three to five years and can be extended if production starts.
- Post-Production Costs: Some leases let the company deduct transportation, processing, and marketing costs from your royalties. A good lawyer will try to eliminate or limit these deductions.
- Pugh Clause: This clause releases any land not included in a producing unit after the primary term ends, preventing the company from holding your unused acreage indefinitely.
- Surface Use Provisions: These sections govern where the company can place wells, roads, and pipelines, and what they must do to restore your property.
Division Orders & Royalty Payments
After a well starts producing, you will receive a division order from the company. This document shows your share of the production and how your royalty payments will be calculated. You should have your lawyer review the division order to make sure it matches your lease terms. Errors are not uncommon, and catching them early protects your income.
An oil and gas lawyer in Pittsburgh, PA can also help if you believe your royalty payments are incorrect. They can request production records from the company, review your payment history, and take action if you are being underpaid.
Common Mistakes Landowners Make
Landowners who sign leases without legal help often regret it. Here are some mistakes to avoid:
- Signing quickly: Companies sometimes pressure landowners to sign fast. Take your time and get legal advice.
- Accepting the first offer: The first offer is rarely the best offer. A lawyer can negotiate better terms.
- Ignoring surface rights: Failing to protect your property can lead to disputes and damage without compensation.
- Not keeping records: Save copies of all correspondence, payments, and documents related to your lease.
What a Local Lawyer Brings to the Table
An oil and gas lawyer in Pittsburgh, PA knows the local market and understands how companies operate in this region. They have experience with Marcellus Shale leases and know what terms are fair based on current conditions. They can also draw on relationships with industry professionals, title companies, and other experts who may be needed to resolve issues.
Local knowledge matters. A lawyer who works in the Pittsburgh area has seen how different companies treat landowners, which terms are negotiable, and what pitfalls to watch out for. That experience gives you an advantage when sitting down to negotiate.
Protect Your Land & Your Future
Signing an oil and gas lease is a big decision. The agreement will affect your land and your income for years to come. Before you put your name on the dotted line, talk to an oil and gas lawyer in Pittsburgh, PA who can review the lease, explain what the terms mean, and fight for better conditions on your behalf.
Your land is one of your most valuable assets. Make sure you are getting a fair deal.