Oil well surface damages to a renter

Is my land renter entitled to a share of the damages on a new well?

Your contract should address that issue.

My late father had a handshake lease agreement with our renter, and we have continued it. Dad used to give him 100% of damages for pipelines, etc. We thought that was a bit much since it’s our land that is tied up for the next who knows how many years. We have shared with him, but I don’t remember the percentage. I think our attorney suggested an amount. I think the percentage would depend on the type of land lease. Is it for a payment outright or do you get a share of the crops or what? At least once we had the pipeline company negotiate separate damages with the tenant over and above what they paid us for the easement.

Your surface lease agreement should address this issue and may need to be revised for the future. What you agree to will depend on the type of lease. For example, a grazing lease may specify that the landowner receives the damages and that the rent is reduced by the net acreage that becomes unusable. If there are crops involved, the company will usually pay separately for the land and for the crop loss. A pipeline ROW is different because the grass will grow back over the ROW. A well pad will be covered with caliche or other material and permanently unusable for grazing or crops. If there is a commercial tenant, such as truck storage or parking lot, then there will be other considerations, including the length of the surface lease.


This topic was automatically closed after 90 days. New replies are no longer allowed.