A gas company’s first lease offer is almost always its own form, written to protect the company. An oil and gas lease agreement attorney reads that form from your side, explains each clause, and asks for changes before you sign. Kostrub Law Firm, PLLC has worked with landowners from Cecil Township since 2006. Lease review is one part of our broader oil and gas law practice.
What happens after you call: we ask for the offer and your deed, read them, and meet to walk through what we would change.
What an oil and gas lease agreement attorney does
An oil and gas lease is a contract. You (the lessor) let a company (the lessee) explore for, drill, and sell oil and gas from your land. In return you get a signing bonus and a royalty, which is your share of production. Most leases last for a primary term, such as five years, and then continue as long as the well produces. That means a lease signed today can bind your grandchildren.
Our job in oil and gas lease negotiation is to find the clauses that cost you money or control, explain them in plain English, and push for better language.
Pennsylvania law that matters
- Minimum royalty. 58 P.S. § 33 requires at least a one-eighth (12.5%) royalty. In Kilmer v. Elexco Land Services, 990 A.2d 1147 (Pa. 2010), the Pennsylvania Supreme Court held that a lease can measure that royalty at the wellhead, which lets the company deduct some post-production costs. Only the lease language can stop those deductions.
- Royalty statements. Act 66 of 2013, 58 P.S. §§ 35.1–35.2, amended by Act 153 of 2022, requires statements that show volumes, prices, and deductions.
- Cross-unit drilling. Act 64 of 2013, 58 P.S. § 34.1, lets an operator drill across unit lines in some cases if the lease allows pooling. So your pooling clause matters more than it looks.
- No general forced pooling for Marcellus wells. Under the Oil and Gas Conservation Law, 58 P.S. § 401 et seq., compulsory pooling is limited to wells below the Onondaga horizon. For Marcellus wells, your consent in the lease is what allows pooling.
- Act 13 protections. 58 Pa.C.S. Ch. 32 sets setbacks from buildings and water wells and requires permit notice to surface owners. A lease can add stronger protections.
Common situations in Washington and Allegheny counties
Key clauses we look at in every lease
- Royalty and deductions. A higher rate means little if gathering, compression, and transport costs come out first. We look for “no deductions” or “market enhancement” language and its limits. If deductions already shrink your checks, see challenging royalty underpayments.
- Pugh clause. A Pugh clause releases acres that are not in a producing unit when the primary term ends. Without one, a single well can hold your entire tract.
- Shut-in clause. A shut-in clause lets the company keep the lease alive with small payments while a well is capped. We ask for a time limit and fair payment.
- Depth severance. This clause releases depths below (or above) the formation being produced. In Washington County, it decides whether the Utica stays yours to lease later if only the Marcellus is drilled.
- Pooling and unitization consent. Pooling joins your acres with neighbors’ acres into one drilling unit. We set limits on unit size and ask for notice.
- Surface protections. Pad location, roads, fencing, timber, crop damage, restoration, and setbacks from your home.
- Water. Use of your ponds or wells, testing before and after drilling, and replacement if your supply is harmed.
- Pipelines and rights-of-way. Many forms grant broad pipeline rights for gas from other properties. We narrow or remove that grant. Separate deals are covered under surface use and pipeline agreements.
You can read a longer walkthrough of common Marcellus lease terms on our blog.
Typical requests we see
- A first offer on farmland in Cecil, Chartiers, or Robinson Township
- A lease extension or amendment on an older lease
- An offer for deep Utica rights under land already leased for the Marcellus
- Co-owners who must all sign the same lease
What happens if you don’t act
If you sign the form as written, you may accept deductions that cut your royalty, let one well hold all of your acres, and give up control over pads and pipelines. These terms usually cannot be changed later without the company’s agreement. Most offers come with a deadline, so the time to ask questions is before you sign.
Have an offer on your table? Call (304) 982-1586 · Request a consultation · After you call, we tell you what to send and how soon we can review it.
How we handle it, step by step
- Gather the papers. You send the offer, any draft lease, and your deed.
- Confirm what you own. We check whether you hold the oil and gas rights and in what share. If title is unclear, we may suggest a title opinion on your tract.
- Mark up the lease. We note every clause that needs changes and why.
- Meet with you. We explain the risks in plain English and agree on your priorities.
- Negotiate. With your approval, we send a redline or addendum to the landman or company.
- Final review. We read the final version and the memorandum of lease before you sign.
What to bring to your first meeting
- The lease offer, draft lease, and any addendum
- The offer letter with the bonus amount and deadline
- Your deed and any older deeds or title papers
- A tax map or plat showing your acreage
- Any older lease on the property
- Notes on where you do and do not want pads, roads, or lines
- Names and contact details of any co-owners
Our Free Pennsylvania Gas Lease Review Checklist can help you prepare.
Fees
We explain fees before work starts. Some lease reviews are simple. Others involve several rounds with the company. We tell you which approach fits your matter up front.
Who handles this
Daniel B. Kostrub handles lease review and negotiation for the firm, along with oil and gas transactions, title opinions, and division orders. J.D., 2002–2005. See Dan’s background and practice, or find directions to our Cecil Township office.
Frequently asked questions
Can I negotiate an oil and gas lease in Pennsylvania?
Yes. Most terms are negotiable, including the bonus, royalty rate, deductions, primary term, pooling limits, and surface protections. Companies do not accept every request, and no result can be promised. But a clear, reasoned redline often leads to better terms than the form. Negotiating an oil and gas lease is easier before any deadline passes.
What royalty should I ask for on a gas lease?
Pennsylvania law sets a floor of one-eighth (12.5%) under 58 P.S. § 33. Many leases offer more. The right ask depends on current activity near you and the rest of the lease. Look at deductions too. A lower rate with no deductions can pay more than a higher rate with heavy deductions.
What is a Pugh clause?
A Pugh clause releases the parts of your land that are not included in a producing unit once the primary term ends. Without it, one well on a small corner can hold your whole tract under the lease. It is one of the most important terms for owners with larger acreage.
What is a depth severance clause?
A depth severance clause releases the formations the company is not producing when the lease term ends. In Washington County, this often decides whether rights to the deeper Utica return to you if only the Marcellus is drilled. Without it, a Marcellus well may hold every depth under your land.
Do I need an oil and gas lease attorney if the landman says the lease is standard?
There is no single standard lease. The form you get is the company’s preferred version. A landman works for the company, not for you. An attorney who represents you can explain what the form leaves out and what is worth asking for.
How long does a lease review take?
It depends on the lease length, any title questions, and how quickly the company responds. We give you a time estimate at the first meeting. If you have a deadline, tell us when you call so we can plan around it.
Get your lease reviewed before you sign
Call (304) 982-1586 or schedule your lease review. After you call, we tell you what to send, review the lease, and meet to explain the changes we recommend.
This page is general information, not legal advice. Reading it does not create an attorney-client relationship.