Meaning of "Release and/or Damage Settlement Agreement

Oil and Gas Leasing Help
1

I recently received an offer to lease mineral rights that I own (1/32 on 320 acres) in Howard County, TX. This came as somewhat of a surprise, since I was not aware of owning any such rights, but some research revealed that I did actually inherit this back in 1986. The terms seemed reasonable, so I signed and sent back the lease forms.

Yesterday, I received the initial bonus check, along with two copies of a somewhat disturbing document titled "RELEASE AND/OR DAMAGE SETTLEMENT AGREEMENT". The text of the release statement is:

The undersigned represents the current owners of the lands described above; the receipt and sufficiency are hereby acknowledged; owner hereby releases, acquits and discharges Paladin Petroleum III, LLC and its successors and assigns from any and all damages resulting from the operation(s) described above. Owner agrees to account to any other party who may be entitled to receive any portion of the total sum above.

Is this a normal part of a mineral right lease? I can't find the specific text online anywhere, so this doesn't appear to be standard wording. And what I've read on the subject of mineral leasing indicates that a damage agreement is something that normally only applies to the surface owner, which I certainly am not. Frankly, this is making me very leery of cashing the bonus check, as I'm apparently being asked to effectively give them a blank check to cover any unspecified "damages" that might occur during drilling.

Even if I was convinced that this is something that I should sign, I'm not sure what I would do with the form afterwards. There were no instructions included, nor any return envelope - which of the four companies involved in the lease so far (operating company, leasehold owner, holding company, and the company the landman works for) would I send it back to?

2

Do not ever sign any such a form. First, it is a blanket release which means that you have no recourse against the operator for any release of hazardous materials, contamination of water table, and perhaps failure to plug the well. Many times you do not know the extent of any damages to the property for many years. It could also mean that the oil company will present your release as a defense against claims for surface contamination, etc and then the surface owner could go after you. In the event that it is found that you own some portion of the surface, you do not want to be held responsible for any environmental clean-up. Second, the last sentence means that you agree to take responsibility for any payments to third parties. This is the responsibility of the oil company. If it pays you too much, that is between the company and you. You do not have to locate and account to others. The oil company has the title opinion and access to information and is responsible for finding and paying the owners. You do not want the oil company to bring you into a lawsuit by other owners on the grounds that you took legal responsibility. Is this language on the back of the check? You may want to consult an attorney about the advisability of sending back a certified letter that states that you are not signing this document. Finally, I think that you had better re-read your lease very carefully to see what you agreed to.