* Search for rental conditions. If there are already regulations on oil and gas leasing that require compensation or protection for the owner of the surface, this is ideal. These provisions must be enforced and can provide the owner of the surface with a good starting point to demand appropriate compensation from the tenant. In general, the SUA will expose the permitted and prohibited activities of all parties to the Agreement. Regardless of your side, make sure all agreements are made in writing to avoid future conflicts. * Respect the legal restrictions of use. While there are few legal restrictions on a mining tenant`s right to use surface property, there are certain guarantees that the landowner should be aware of. First, the tenant has the right to use only the amount of surface assets that is “reasonably necessary” to produce oil and gas from that particular lease (or pooling if pooling has occurred). If the use is more than reasonably necessary (i.e. The landowner uses the water on your property to produce oil and gas on another unpooled property), this is not allowed. Second, the doctrine of accommodation protects a surface owner who has already used a surface in certain situations.
For more information, check out this blog. After all, the oil company does not have the right to act negligently – which means that it is bound by an appropriate operator standard. If any of these restrictions are violated, it can provide a good opportunity for the surface owner to start a conversation about a surface use agreement with the tenant, who would likely prefer to sign an agreement rather than face litigation. * Be respectful and realistic. Since oil and gas companies are not required to sign a surface use agreement, surface owners are not in a good negotiating position. It`s important to keep this in mind when talking to the company and inquiring. By being respectful and realistic to the company representative regarding the conditions that should be included, it is much more likely that a surface owner will receive a surface use agreement. If the operator and the owner of the surface do not reach an agreement on damages, some States grant the operator the right to proceed with the development, the damages being then determined by arbitration or litigation.
Counsel explained to me that if the debtors and a surface owner cannot agree on the terms of a surface use agreement, the debtors can still access the surface material to the extent necessary for the use of the mineral under an implied easement. First of all, I would like to point out that the best way to negotiate surface protection measures is to negotiate the oil and gas lease agreement between the oil company and the mine owner. This assumes that the owner of the surface owns some or all of the minerals and has a “seat at the table” during negotiations. The parties each have something that the other wants and a real negotiation can be conducted. Surface protection is best included as part of the actual lease. However, several times the mineral property has been “separated” from the surface, and the first time the surface owner knows that an oil and gas lease has been signed is when the oil company comes forward to develop the minerals. In these cases, a Surface user agreement is probably the best alternative. * Beware of old abandoned equipment or potential contamination issues.
If these types of problems exist, it could be a starting point for a discussion about the need for surface protection. If a surface owner is concerned about contamination or safety issues, they have the right to contact the Texas Railroad Commission and request an investigation/assessment of the situation. Knowing this, an oil and gas tenant may be more willing to work with a surface owner if these issues are present to avoid DRR involvement. * Request an operational meeting. In advance, it is a good idea to sit down with the tenant of the ore and hold a meeting to discuss operational issues. This includes things like access to doors, closed doors, working hours, etc. Some oil and gas companies believe that surface use agreements benefit both parties and are happy to negotiate with the surface owner to avoid any confrontation in the future. The organization of a meeting allows the owner of the surface to determine the willingness of the tenant to cooperate. At the very least, a surface owner may be able to obtain maps and details about the scope of future operations on their property. * Look for a counterparty opportunity.
Often, the mining tenant will require the surface owner to do something that is not authorized under the lease. For example, the oil and gas company may apply for a pipeline easement or a road easement above the property to reach another leased property. This is the perfect time to submit a potential surface use agreement and look for favorable conditions. These safeguards require notifying surface owners of things such as the drilling start date, a copy of the operating plan, the operator`s contact information, etc. They also require compensation for certain surface disturbances, such as the installation of piping. It`s best to approach SUA negotiations with your goals in mind so you end up with an agreement to live with. Most states offer oil and gas operators access to surface property, which is located above each reservoir to be drilled. The mineral is sometimes called the “dominant domain”. In other words, the mineral has the right to access the surface plot to access the underground hydrocarbons.
This becomes complicated with the advent of horizontal drilling, as minerals under the surface well may not really be developed as production areas may be located under other expanses. A surface use agreement is a voluntary agreement between the surface owner and the owner/lessee of the ore (usually an oil and gas company) that governs the relationship between the two parties. In some states, such as Oklahoma and New Mexico, oil and gas companies are required by law to enter into these agreements before starting production. In Texas, unfortunately, there is no such legal protection for surface owners. Mining tenants are not required to enter into such an agreement, but are often willing to do so in order to have a good working relationship with the owner of the surface. With that in mind, Texas surface owners must use every lever they have to convince an oil company to sign this type of agreement. A Surface Use Agreement (SUA) is a contract between the surface owner and the tenant (usually oil and gas companies) for an oil and gas lease. This contract describes the rights, obligations and obligations of the landowner and the operator, including the extent of surface disturbances permitted in the construction of wells and roads, as well as compensation for property damage that may be caused by the operator. This agreement helps to resolve ambiguities and uncertainties for both parties.
Some states require them before a well can be drilled. Listen to this episode to learn how to negotiate a Surface Use Agreement (OMA). OWNER: OPERATOR: Example of a seismic surface use agreement (received by Steve Sherard, attorney) This agreement is entered into and entered into on that day by 20, of and between , whose address (“Licensor”) and whose address (“Beneficiary”) is. The beneficiary has the right to assemble the signature pages of executed counterparties and attach them to a single counterparty for registration purposes. IN WITNESS WHEREOF, this Surface Use Agreement shall be signed by the undersigned parties in the presence of the witness signed with effect from the date of 2017. WITNESSES:GRANTOR:Printed name: TOWN OF SHREVEPORTBY: Ollie S. We will let a legal expert delve deeper, but in the meantime, we hope that this will help shed light on this issue. Once the state has signed a mining lease with a company, the tenant can negotiate a surface impact payment (similar to a surface use agreement on private land) on state land in accordance with the rules and regulations below. Some states have passed laws to help navigate this situation, which we`ll talk about later.
Dominant ownership is no longer something operators can hang their hats on because of horizontal drilling, and many states have passed laws requiring oil and gas companies to take certain steps when faced with shared ownership. Some examples of states that have done so include Colorado, Wyoming, and North Dakota. Here are some ideas to keep in mind if you`re looking for a surface use agreement. In no particular order, there are things to consider here when negotiating a surface use agreement. Keep in mind that just about everything is on the negotiating table when it comes to water consumption, land use, and leasing your minerals. Subscribe and leave a review on iTunes or wherever you get your podcasts – we read each of them and enjoy it very much. Plus, you can have a scream in a future episode! Make sure that the conditions of SUA do not negatively affect your ability to use your land!! Contrary to what is set out in Article 6.15(c) of the Disclosure Plan and Permitted Charges, real property that will be subject to the Surface Use Agreement and the Shared Use Agreement will be free of charge. The content of our e-mails is value-added, tailored to your interests as far as possible and always free of charge. To understand what to consider when negotiating a surface use agreement, it`s helpful to understand what types of activities will take place on your land as part of drilling a well. In episode 15 of the Mineral Rights podcast, we talk about the entire life cycle of an oil and gas well and the typical activities associated with it.
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