0 – 15 Minutes
Doug discusses The Clark Law Firm’s representation of oil and gas right owners and property owners in Pennsylvania regarding natural gas issues. Attorney Clark explains how he has never represented gas for pipeline companies and how he works and fights for Pennsylvania residents and gas right owners.
Doug goes on a bit of a rant about techniques that the gas and pipeline company landman use in an effort to induce or persuade Pennsylvania property owners to sign bad oil and gas agreements. Doug explains that companies love when large acre property owners or property owners with lawyers sign bad gas agreements. The company then seeks to use the bad agreements and present them to other property owners and explain that the person who signed this agreement had an attorney and you should just simply sign the same agreement and save money by not hiring an attorney. Doug explains that what your neighbor does, or anybody else in your area does, is not necessarily relevant to your case when you were negotiating to maximize money and addendum language in your unique situation. Of course, if there is a higher per acre or per foot rate paid in your area, we want that to be the floor for your compensation and your payment must equal or exceed the amount received by others in your area. However, at no point do we rely solely on what anyone else may have done, because they may have signed a terrible natural gas or pipeline agreement and their lawyer may have been experienced and had little knowledge of Pennsylvania oil and gas law or experience in negotiating complex natural gas contracts. Do not be fooled by a landman working for the company, get your own experience oil and gas lawyer and do not sign anything without consulting and knowledgeable attorney.
15 – 30 Minutes
Attorney Clark breaks down oil and gas Option Agreement and how option agreements operate. Natural gas Option Agreements provide the company (Grantee) and “option” to decide to use the agreement or let the agreement terminate and become null and void. Property owners must aggressively negotiate option agreements to increase the up-front option payment and also negotiate to reduce the length of the option term. Landowners, or their lawyer, should seek to negotiate option agreements to require up-front payments that meet or exceed their attorney fees. This provides protection to the property owner (Grantee) so that if the company does not exercise their option, the property owner will not lose money by signing the option agreement. The Grantee (property owner) must also negotiate to reduce the length of the option that they are granting to the company. Options should generally negotiated to allow a 1 or 2 year option term, but in some cases a 3 year option term may be reasonable. However, it is extremely rare that a property owner should even consider an option term in excess of 3 years. Remember, your property is under the burden of an agreement that may or may not be used during the option period. Property owners must limit the time the option agreement remains open as it is a burden on your property.
30 – 45 Minutes
Attorney Doug Clark dives deep into the language of a Temporary Workspace Option Agreement provided by SWEPI, LP to a Tioga County property owner. Doug reads verbatim from the temporary workspace option contract and explains in understandable terms exactly what the contract words mean for listeners. Doug highlights problems and concerns with this workspace option agreement as he reads the extremely friendly company contract. Doug also provides a detailed explanation of the option terms and explains the compensation rates and the need to have a map attached to agreements authorizing surface activity on your property. This agreement provides for ingress and egress and is assignable by the company to any third party and it does not provide for a termination date in the agreement. This workspace agreement is exceptionally provide and provides the gas company powerful rights that may remain in effect for decades while offering the property owner peanuts in compensation and mountains of potential future liability issues.
45 – 60 Minutes
Attorney Doug Clark rips into the temporary workspace option agreement and explains how this agreement is one-sided in favor of the company. This workspace option agreement only provides for compensation for a one-time payment in the amount of $800 per acre. The temporary workspace agreement amazingly does provide for a date of termination. This agreement, although called a “temporary” agreement, could last for decades and does provide any date of termination. It also does not have any mechanism for termination due to a lack of use or any other reason. This workspace agreement provides that the property owner will be paid $800 per acre as a one-time payment only and the company can conceivably use the workspace area forever.
The temporary workspace option agreement also allows the company to assign use of the workspace to any other third-party. In fact, the company can continue to use the workspace on their own, and still assign the ability to use the workspace to any other gas or pipeline company or even an individual. The assignment rights of the company are literally unlimited under this agreement. Also, there is no language in the workspace agreement that addresses the payment of damages, reclamation of the work area, or whether there will be fencing or gates installed to protect the workspace area from trespassers.
On top of all of these enormous issues, this workspace agreement does not provide any liability protection for the property owner. This “temporary” agreement could last for decades and involve major industrial operations, and the property owner will receive a one-time payment only of $800 per acre. The property owner then would be exposed to future liability for the entire length of this agreement and could be subject to lawsuits and claims in the event anyone is injured or property is damaged in this area. Lawyers typically sue every company or person they can legitimately bring a claim against when they bring a lawsuit. If a person is injured or killed on your property, you should expect to be a defendant in a lawsuit, but you should also expect to have indemnification and liability protection.
This workspace agreement offers absolutely no indemnification or liability protection for the landowner. In other words, if you are sued, you will have to hire an attorney at your own expense and defend the lawsuit, even if you did nothing wrong. Defending lawsuits can be extremely expensive and may costs tens of thousands or even hundreds of thousands of dollars in legal fees and expenses. Under this agreement, the property owner is exposed to tremendous liability while only receiving a one-time payment of $800 per acre for property being used as workspace.
Attorney Clark offers his opinion that it is a disgrace for companies to offer property owners surface use contracts without providing for complete and total liability protection. You as the property owner should not expose yourself to liability in any circumstances, yet alone in a contract that could last for many decades and only pay you a one-time payment of $800 per acre. This is a classic example of an extremely company favored natural gas agreement that does little for the landowner but provide for a very small one-time per acre payment while exposing the property owner to substantial liability for potentially decades. Pennsylvania property owners and gas right owners must stop signing bad agreements and simply relying on the gas or pipeline company landman to educate and inform them of their rights in these serious contracts.