Understanding Oil & Gas Agreements
Oil and gas leases usually refer to a contract between a minerals rights owner and a drilling company that wishes to extract those minerals (such as oil, gas, or other hydrocarbons). Understanding the commitments of these contracts can be difficult in the absence of professional legal assistance. Most leases give drilling companies broad discretion to decide how chemicals and waste will be stored on the property, the ultimate locations of well heads, pipeline routes, and other determining factors that can dramatically affect a landowner’s quality of life. Leases also rarely describe the potential water pollution, air quality impacts, and other risks of extracting oil and gas from the landowner’s property.
The length of oil and gas lease agreements averages around 5 years. Typically, if a parcel is not drilled after a certain period time then the contract expires. Some leases, however, allow for extensions without the grantor’s approval. In other cases, gas companies use “force majeure” to extend a lease indefinitely by arguing that they were unable to meet the terms of the agreement due to legal or regulatory technicalities beyond their control. Whether it be the case that a landowner does eventually see a well on their property, or that their lease continues beyond their intentions, signing a lease can lead to a long and complicated relationship with the oil and gas industry.
Besides the basic mineral rights contract, the record of ownership associated with a particular parcel can be much more complicated than a single transaction. For instance, mineral rights owners are more often than not approached by “landmen” that represent different consulting firms. Two of the more prominent companies in Allegheny County are Dale Property Services and Huntley & Huntley. Once a land agent (lessee) completes a lease with the mineral rights owner (lessor), the rights can be transferred or “assigned” to a drilling company such as Range Resources, Chesapeake, or EQT. These rights might be assigned yet again to another drilling company as corporations trade their assets over time. Leases can also be extended, terminated, and amended. Other records can denote a right of way, where a landowner agrees to allow a pipeline across their property. Pennsylvania also has what is known as “split estate” where the mineral rights to a property may have been sold decades before the present landowner purchased the property. In this case one might also find deeds documenting the transfer of the surface rights to the property from one person to another.
To simplify the many different record types for users of the Allegheny Lease Mapping Project, FracTracker has created six broad categories. Below are descriptions of the record types associated with each of these categories. Click on the example documents under each category to see examples of each record type. FracTracker would like to thank Fair Shake Environmental Legal Services for assisting us with these definitions.
FracTracker found numerous overlaps within different records upon closer inspection of documents. For instance, a “LEASE” record may end up being an O&G lease, whereas other “LEASE” records end up being amendments to an O&G lease. These overlaps lead us to conclude that some records have been incorrectly categorized over the years. To obtain records for a particular parcel, users can click on the link next to the record of interest on the interactive map. This will lead to the record’s page at the Allegheny County Department of Real Estate Office website. Note that some of these records can exceed 10 pages and the county charges a per-page fee.
We have supplied here but a few of the many thousands of documents available in the County’s system in order to provide context to the project. Given that these are all public records, albeit for a fee, we encourage users of the Allegheny Lease Mapping Project to visit the County’s website to become more acquainted with oil and gas records.
O&G: oil & gas leases, or contracts, between the owner of minerals, typically called a “lessor,” and a corporation, typically known as the “lessee,” where the lessor gives the lessee the right to explore, drill, produce, and sometimes even store oil, gas and other minerals for a specified primary term, and as long thereafter as oil, gas, and minerals are produced in paying quantities. The lessor usually gets royalties in exchange for the right to produce oil, gas and other minerals. At times, only a memorandum of the lease is provided to give notice that a property has been leased, but the full terms of the lease have not been recorded.
AMEND O&G: amendments or modifications to oil & gas leases to alter or add to the terms of an original oil & gas lease.
LEASE: amendments, or modifications, to leases of different kinds, such as water withdrawal leases, oil & gas leases, and may include lease extensions beyond their primary term.
O&G Lease (extension)
NOTICE EXTENSION LEASE: notices that record the payment of a certain amount of money (usually called “shut-in royalties”) to extend the primary term of an oil & gas lease. The primary term is typically the period of time that an oil & gas lease remains in effect even though oil & gas production in paying quantities, drilling or other operations have not been initiated. 8498918 (notice of extension of primary term of o&g lease); 8498928 (notice of extension of primary term of o&g lease); 8684272 (notice of extension of primary term of o&g lease)
O&G Lease (terminate)
RELEASE: releases of property rights and/or other legal rights that the owner would otherwise be entitled to under law.
RELEASE LEASE: releases of oil & gas lease rights that a person would otherwise be entitled to under law.
RELEASE OIL & GAS LEASE: releases of oil & gas lease rights that a person would otherwise be entitled to under law.
SURR O&G: instruments documenting the voluntary transfer of oil & gas lease rights by agreement, but without the presence of a sale of those rights.
TERM O&G: instruments providing notice that an oil & gas lease has terminated, usually because the lease has terminated by its own terms or because potential property interest holders wish to clarify their understanding of the expiration of a lease.
TERM LEASE: instruments providing notice that a lease has terminated, usually because the lease has terminated by its own terms or because potential property interest holders wish to clarify their understanding of the expiration of a lease.
O&G Lease (transfer)
ASGMT O&G: instruments documenting the sale, transfer, or conveyance of all or, many times, a fraction of ownership interests and/or rights of an oil and gas lease.
ASGMT LEASE: instruments documenting the sale, transfer, or conveyance of all or, sometimes, a fraction of ownership interests and/or rights of a variety of leases.
Right of Way
R OF W: documentation of the grant of a right to place a pipeline across a person’s property and maintain that pipeline.
AMEND RIGHT OF WAY: amendments, or modifications, to the original grant of a right of way.
ASGMT RIGHT OF WAY: assignment of rights to a right-of-way across someone’s property. Assignments of property rights are instruments that document the sale, transfer, or conveyance of some or all of ownership interests.
Right of Way (terminate)
SURRENDER R OF W: instruments documenting the voluntary transfer of some or all right-of-way rights by agreement, but without the presence of a sale of those rights.
RELEASE R OF W: releases of right-of-way rights that a person would otherwise be entitled to under law.
TERM RIGHT OF WAY: instruments providing notice that a right-of-way agreement has terminated, usually because it has terminated by its own terms or because potential property interest holders wish to clarify their understanding of the expiration of a right-of-way.
Other Common Records
AGREEMENT: various types of agreements, lease extensions, and court orders that serve to alter or shift real property rights and/or obligations.
ASGMT AGRT: both oil & gas lease and road and/or pipeline right-of-way assignments. Assignments of property rights are instruments that document the sale, transfer, or conveyance of some or all of ownership interests, which may include, among other rights and obligations, leases, royalties, or net profit interests.
DEED: instruments documenting the transfer of title to a property from one person, the grantor, to another, the grantee.