I own land in Kentucky that has an old oil well on the property. I’ve been approached by an oil company to lease the well and be paid a royalty. I am a little hesitant since I have zero experience on how a lease works. I have a few question:
- As the land owner am I responsible for any environmental issues should they happen. I am scared to death of a spill or oil fire that I will be liable for and possibly sued. I am hoping the oil company is liable for everything and not me as the land owner.
- What is a typical royalty paid to the land owner?
- What is the typical lease term? And at the end of the term if things aren’t going as planned can I simply to renew the lease?
- As the land owner am I liable for any accidents to anyone working on the site?
- How are royalties usually paid? On the amount of oil produced? Or straight monthly payment that never changes? 6 my biggest concern is me as the land owner being liable for any accidents such as a spill, contaminating water, fire at well, EPA issues, Etc. This keeps me awake at night.
- Should I have a lawyer read the lease agreement or is this a standard state document?
- Does the state inspect the well is safe before pumping begins?
- Is the oil company liable for any property damage.
- When pumping is complete, does the oil company return the site to its original state? Remove all holding tanks and any other related items? Sorry for all the question, but I’m new to all this. Thanks