Well pad compensation

The lease I signed stated the o/g company did not have surface rights. The company had indicated they would like to put a well pad on the property if core samples are favorable. What kind of compensation can I expect and what precautions should I be wary of?

Hi Cora,

Everything should be outlined in the lease there usually isn’t much negotiating room after the lease is signed. Compensation depends on how much of the surface is disturbed including the road to get to the proposed pad. Typical things to be concerned about are sediment control, light pollution, noise pollution, access roads, tree management, and pipeline easements should be negotiated separately. I would absolutely advise having a professional help you in these negotiations!

Hope this helps! ~Rachel

Thank you. My lease specifically states they will not have any surface operations on the leased property, but they now want to put a well head

Minerals are the dominant estate meaning that a surface owner cannot prevent the owner of the mineral rights (including a lessee) from accessing the minerals, however, the operator has to provide reasonable accommodations. In a nutshell, the operator doesn’t necessarily have to compensate you unless it acts negligent or doesn’t at least attempt to work with you for locating its operation. That said, definitely reach out to a professional for advice.

In most states, if you own the surface and some or all minerals and your lease specifically prohibits the use of the surface for operations, then the terms of the lease will prevail. If your lease is with a company other than the operator and has not been assigned to the operator, then the operator may not be bound by your lease terms. You should consult a WV oil and gas attorney about your ability to prohibit the use of the surface and to help maximize your compensation. You mentioned “core samples” and this is confusing. Is this an oil and gas lease or a mining lease? What kind of “core samples” were taken? Is there a test well drilled somewhere nearby?

Thank you. It would seem that if they are not bound by the terms of the lease, then the lease would be voided. But, I was told the core samples would determine if the land would support a well pad. It is for gas horizon wells

Your lease would not be invalidated. TennisDaze is referring to a situation where the owner of your lease is a non-op working interest partner. This means that as the leaseholder, your lessee is entitled to any oil and gas production (burdened by the royalty it owes you). The operator is given the right by the state to extract the minerals from your property, in the name of conservation, whether or not your leaseholder “agrees”.

Failure to abide by lease terms will rarely void a lease unless that is written into the lease. Otherwise it is a question of proving actual damages. It seems that the company has approached you about negotiating payment for unsigned the surface for a well pad. Will you be receiving royalties from these wells (on lease) or are these off-lease wells and you will not be getting any royalties? Damage payments can be significant and are taxable income to you. Consider the size of any well pad as being paid at $X per acre or per sf. Separate damages for roads, pipelines, electric lines, etc. Do not grant in perpetuity, but only while the ABC wells are producing from your minerals. Best to get legal advice on the contractual terms and what is being charged in your area. There are lots of issues which are discussed on threads on this site.

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Thank you again! That was very helpful. This is a wonderful site with very knowledgeable people. Thank all of you who responded.