The Leases Pertaining to Oil and Gas are Hardly Covered by Consumer Protection Rules

The gas and oil drilling companies have been leasing land from landowners but misunderstandings have arisen about the clauses in the deeds. The landowners contend that they have been tricked into leases that are ultimately causing damage to the land. This has led to the eruption of legal battles between the two sides.

Advocates for the landowners contend that the landmen who peddle the deeds trick the owners with aggressive sales talk. The landowners are also too eager to pocket earnings and this make them exposed to deception.

The typical sales talk of the landmen while presenting their case before over two dozen owners of land is “We’re in town until tomorrow. We have already signed up all our neighbours”. The peddlers then say that if the signature is not done immediately then they will miss out on easy earnings because the other firms will just pull out the gas from under their land making use of a nearby well.

Some of the landmen knock on owners in areas that are not rich, just prior to the holidays and offer spot cash for signing of a lease. They could be offering thousands of dollars for each acre as bonus that would be given after completion of signing formalities. Royalties range from 12.5% to 20% of the amount the firms make from selling this gas; it could mean a huge amount each year for the landowners.

Jack Richards of American Association of Professional Landmen said that all of the members of the association follow strict ethical codes. His group also encourages the landowners to make queries prior to the inking. He said, “We promote open and honest communication between the landmen and the landowner before signing the lease”. He said that the lease forms are standard and include protection for those who own the land. But there are some deeds whose language is so confusing that latter trip the landowners.

Attorney David McMohan of West Virginia Surface Owners’ Right Organization explained that once the well is drilled it could produce gas for many decades and the landowners get locked by the lease terms. He explained, “With a gas lease you’re permitting industrial activity in your backyard, and you’re starting a relationship that will affect the quality of living for you and your grandchildren for decades”. He added that unlike other contracts, the leases pertaining to oil and gas are hardly covered by consumer protection rules. This is because drilling has become very common in states that do not have much regulation.