Drilling Rights Can Make Your Home Unsellable
Many people foolishly lease the minerals under their homes using oil and gas leases provided by land-men. These leases are horribly one-sided and can entitle the oil companies to virtually ruin the value of your surface buildings and land. The answer is to negotiate an addendum to the oil and gas lease and execute a surface damage agreement. This is critical. Never execute an oil and gas lease without obtaining advice of counsel and negotiating better terms than are contained in the standard lease you are offered.
Just imagine when you go to sell your home and the buyers all run away after finding out some oil company has the right to run pipelines, install separators, erect oil tanks, make roads and gates, install supplemental electrical and other utilities, not to mention drilling oil and gas wells, right there on your home-sweet-home. We have had clients simply walk away from purchasing lovely homes after finding out the land was subject to an oil & gas lease and no protective addendum had ever been negotiated. This is one reason to always negotiate such an addendum. It keeps your parcel sell-able.
Don't Believe The Old "No Addendum" Lie
Land men don't like having to work hard on small parcels, especially one or two acre homesteads. They are often caught claiming that no addenda are allowed on small parcel deals. Think about it. If the oil company has a right to ingress and egress on your surface, and to use it for various drilling related purposes, it is EVEN MORE IMPORTANT for small parcel owners to protect against such things than large parcel owners who may have enough land to let the oil and gas companies use a portion without restrictions. So beware of the land man claiming that no addendums are allowed, this practically never the case, and if it is, you should firmly walk away. Also note that land men are paid by commission and often try to stampede and rush land owners. True urgency is exceedingly rare, so view such tactics with suspicion. Threats to force-pool or force-unitize you are equally over-blown. It can be done, but with tremendous cost and difficulty for both sides, which oil and gas companies have a strong desire to avoid (and the land man gets no commission.) Land men are often 'used-car salesmen' types and dislike working hard on small acreage leases, and they hate negotiating long addendums when the acreage (and their commission) is small. Their inconvenience does not matter. You must advocate very strongly for your interests and be persistent. The lease terms are far more important to you than they are to the land man and he knows it. The original lease is very unfair to you, and he knows that, too. If you need to gain leverage, band together with your neighbors so you have more minerals and negotiate as a group.
The 'no addendum' lie can literally ruin your land's value and destroy your home's resale value. Getting a surface damage agreement and cleaning up boilerplate mineral leases is essential to the small parcel owner. It is even more important to the postage-stamp landowner than the big landowner. Don't let a land man tell you otherwise.