The Basics of Oil and Gas Leases: Part I

Exploitation of oil and gas is going through a rebirth in Pennsylvania today, and many attorneys and individuals are new to the field and treading on uncertain ground regarding what they should and should not accept in a lease. Certain things, like royalty payments, are more fact specific, and general advice about that clause depends on land specifications and the location of the reserve the landowner situated on.

In this first post in the oil and gas series we’ll determine what basic things you should know prior to entering an oil and gas lease, especially in Pennsylvania, where much of the legal territory has been unregulated for 100 years.

First, many people don’t know that every plot of land begins with two separate estates (sets of ownership rights), a surface estate and a mineral estate.

  1. A surface estate, which allows use and exploitation of the surface area and the area above it to a reasonable point. An example would be placing your house, your farm, and a windmill on your property: then you are using the surface estate.
  2.  The mineral estate gives use and exploitation rights to all minerals under that piece of property. This would include the right to mine for coal or gold, and drill for gas and oil.

These two estates are both included in your land parcel, unless they have been severed at some point. As the country expanded west it was common for developers or even the states themselves to retain the mineral estate. For most Pennsylvanians, unless the mineral estate was sold by a prior owner, the landowner is probably the owner of both estates. A title attorney can check for full or partial ownership of the mineral estate.

The fact that most Pennsylvanians still own their mineral estate, gives the individual more control over the decisions for a lease. Although you will feel a lot of pressure from neighbors or the company attempting to lease your mineral estate, you should be cautious when accepting the terms of a lease and always consult an oil and gas law attorney.

You should be exceptionally careful if approached about outright selling your mineral estate, as that removes the right to valuable royalty payments for yourself and future generations. When it does come time to divide your estate, you may divide the ownership interests in the mineral estate, just as you would in the surface estate. However, you must be careful because when you do this, because it severs the mineral estate from the surface estate.

The division of the two estates creates an undivided interest in the whole of the mineral estate. So, where a person gives the mineral estate to her two children, each child owns half of the mineral estate, but niether can point to one half of the property and say, “That’s MY half of the mineral estate!”

One of the children is free to subsequently sell his half, or sell one quarter and retain one quarter. The effect of the sale, and the conveyance of a mineral estate, requires extremely precise language. Any ambiguous statements will not be used to your advantage in court-and a mistake in an oil and gas conveyance can be very costly!

In the next post we will discuss some of the more common clauses in leases, and what effect they have on your mineral estate and your rights. Although this portion makes mention of Pennsylvania, and I am only licensed to practice in Pennsylvania and Wyoming, the information in the second post in this series is broad and merely informative; it is not intended to be state specific.

Shannon K. McDonald studied oil and gas law while in school in the state of Wyoming. Wyoming has a thriving oil and gas industry, and has been regulating the exploitation of minerals while preserving the rights of individuals and the beauty of the land for twenty years. While in Wyoming, Shannon K. McDonald learned some of the nuances of the leasing system and how to negotiate and form oil and gas leases to benefit the landowner.

Contact Shannon K. McDonald for assistance with your mineral leasing situation today.

Top Six Reasons to Consult an Attorney

I started out with just five, but folks, the reasons just keep coming, and number six is truly what people are looking for from those they do business with.

  1. Avoid your exposure to risk- You want to move forward, you want to prosper, and you want to succeed. If fortune does “favor the bold,” then what you should do is be bold. However, when you embark on a new venture, you face risks. Consider these risks before you move forward with any venture, whether business or personal, and use an attorney’s expertise to help you overcome these risks.
  2. Solutions to your problems- I have worked with many diverse clients while working in the law, and prior to that, while working in the business world. The experiences I have had are a valuable asset to you. My work with others can only serve to benefit you: perspective from others is a good way to help solve problems.
  3. Study of the law and facts- when you consult with me, you will benefit from a thorough review of the facts and law in your issue. After an in-depth interview with you, to gather the facts of your specific situation, and detailed research into any and all cases and laws that might affect your next move. Making an appointment with this office will secure a comprehensive study of the law and facts to help you solve your problems.
  4. Communication on your behalf- Let’s face it, sometimes you have to be the bad guy. When you need to take an aggressive posture in a dispute or a negotiation, that is a position in which your attorney, in their capacity as zealously representing you, can help you in that situation. Alternatively, when you find you may need to back down on an issue, having a proxy, such as an attorney, can help you to save face.
  5. Timely performance- When you pay for an attorney, you pay for someone who has the time and resources to make sure an issue gets done when it needs to be done. A good attorney makes your urgent and important matter, their urgent and important matter.

AND

6.   Ongoing support- When you retain an attorney, the attorney should be available, the attorney should be accessible, and the attorney should provide sound advice- these three things comprise support. With me as your attorney, this support goes beyond the first issue you discuss with me. The support continues, throughout aspects of your life and other future issues you may run into. Whether legal or not, having a person you can trust, and who is unquestioningly on your side, is crucial to your wellbeing.

Your Rights at a DUI Stop: Sobriety Checkpoints and DUI Roadblocks

Sobriety checkpoints and DUI roadblocks are increasingly used to enforce DUI laws. The courts have found that if the police follow specific guidelines, a systematic checkpoint is constitutional. The police must follow certain roadblock guidelines and respect your individual rights.

If the guidelines set out by the courts are not followed, then the DUI arrest may be invalid. You should discuss with your attorney the process that you underwent regarding the arrest: from the initial stop, up until the arrest and Miranda Warnings.

What guidelines are there?

The United States Supreme Court case Michigan v. Sitz established many of the guidelines that police officers must follow in a roadblock or DUI checkpoint. Pennsylvania has established a number of other cases which largely follow these guidelines.

  • The police may not choose vehicles at random: The officers conducting the checkpoint musty have a pre-established neutral mathematical formula for which cars to stop. For example, officers may determine ahead of time that they will stop only every third car. This prevents potential discrimination by stopping individuals based on appearance.
  • Checkpoints must be established to ensure safety of police and the drivers: The roadblock must be highly visible to ensure time for stopping or slowing down to a safe speed. The roadblock must also be done in a way that minimizes the amount of time each driver is at a checkpoint.
  • You may turn around prior to the checkpoint: So long as you do not break any traffic laws or regulations, you have the right to turn around and take a different prior to being stopped at the checkpoint. That is, if you can turn off one block ahead of the actual checkpoint, you may do so to avoid the sobriety check.
  • The stop may not last long enough to constitute an unreasonable seizure of the person without reasonable suspicion: when a driver is stopped, the initial interaction with police may last only long enough to ask a few questions and determine reasonable suspicion. Reasonable suspicion may include slurred speech, an odor of alcohol, glassy or bloodshot eyes. If the officer cannot cite reasonable suspicion within that brief initial meeting, the driver should be allowed to leave.
  • Sobriety Checkpoints and DUI Roadblocks are only permitted if they are planned and a part of an on-going safe driving program and the checkpoint follows established protocol: You should discuss with your attorney whether the protocol was established and if so whether a judge or a representative from the district attorney’s office participated in it.

The Supreme Court deemed that a car stopped at a roadblock is a seizure, but, if the purpose of the roadblock is to ensure the safety of all drivers, and the interaction is brief, then the seizure is not unreasonable. Sobriety Checkpoints are not meant to identify criminal behavior and are considered a part of regulatory law, not criminal law.

What are your rights?

As an individual faced with a Sobriety Checkpoint or a DUI Roadblock, you have certain rights. Your rights fall mainly under the Fourth Amendment, the right against unreasonable search and seizure. The government may not intrude beyond the point of a reasonable seizure.

A Sobriety Checkpoint must meet five criteria:

  1. Vehicle stops must be brief and may not entail a physical search
  2. There  must be sufficient warning of the stop prior to arrival and you have the right to avoid the DUI stop if you may do so lawfully
  3. Decisions for the checkpoint, time, conduct, etc. are subject to prior administrative approval
  4. Timing and placement of the checkpoint must be based on experience as to when and where intoxicated drivers have been found previously
  5. Decisions as to which vehicle to stop must be predetermined and is not to be left to officer discretion.

Knowing these rights ahead of time can help you when faced with a Sobriety Checkpoint or DUI Roadblock. If you believe that your rights have been violated, or that you have a challenge to the roadblock, please contact our office today for a free consultation.