I’m not sure if this is the place to ask, but I’m hoping someone has a little guidance for me. I’m looking to buy some property that is for sale. It has a livable house. The issue I’m worried about is that it has a producing Marcellus well on the property. The property does not come with mineral rights. I know often gas companies will buy the area of the pad and lease road, but that is not the case. Realtor has said that all of the land comes with the sale and was not sure on much about the lease road and pad. I’m curious about my limitations and liabilities with having this in the center of the property. I know the dangers and possibilities, and I can live with that. The legal side of it is what concerns me. If there was an accident or explosion or leak or spill. A drip truck goes off the lease road into my woods. Will this cause increases in property insurance? Will this cause any issues with lending or getting a mortgage? I’m going through the hoops now, so I will learn as I go. I just wanted to see if anyone has any advice. If things progress, I plan to get ahold of a landman or public relations from the gas company and try to get an idea on what the agreement is. Will I have to sign a new agreement? Thanks in advance for any help!
It’s a consideration. Could well be why they are selling. Once you let them on your property it sometimes starts chasing its tail. Random people on property don’t know if they have insurance. Your insurance could spike.
If the realtor says the pad and road are still within the property boundaries, that usually means:
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The gas company has an easement or surface agreement, not ownership.
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The agreement stays in force after the sale.
You normally do NOT need to sign a new agreement. You simply take the property subject to the existing agreement.
Before buying, ask for:
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The Surface Use Agreement
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Any Right-of-Way or Easement documents
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The original oil & gas lease
These should appear in the title commitment or county records.
Generally the operator is responsible, not the landowner.
If something happens such as:
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explosion
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spill
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leak
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truck accident
The well operator and their contractors carry liability insurance and regulatory responsibility.
That said, check whether the agreement includes:
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Indemnification clause
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Operator liability coverage
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Environmental responsibility
Most modern agreements heavily protect the surface owner.
This is exactly what I came to say! Also, the SUA and/or lease will have reclamation language that needs to be verified so you can hold the operator to it when the well is finished producing. Although this is probably not the case, if there’s a continuing ORRI as part of the surface agreement, the surface owner would be entitled to that compensation. This isn’t likely the case but worth mentioning to check on just in case.
What is a continuing ORRI? Thank you for the information!
Things are progressing and the title work is being done. Once I get the documents back, I have a good lawyer that has agreed to look over everything for me to make sure of my concerns. I found a map showing the area the land agreement is for. Seems to be the pad and lease road and the slopes above and below. I don’t see any language in the agreement about new farm fencing. I assume I could fence the slopes of the lease road to utilize that ground for livestock seeing as how it does not affect their oil and gas operations. Something I can ask my lawyer but if anyone here has any farmer/gas company companionship info I’d appreciate that also. Thanks everyone for the replies so far!
ORRI=OverRiding Royalty Interest