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Oil and gas leases require careful consideration

Striking oil in the backyard has long been a fantasy of those who wish to gain vast riches. Given that parts of Texas are proven to be flush with oil and gas deposits, the prospect of such riches can seem tantalizingly achievable.

If you own property situated over potentially large reserves of oil or gas, there is a chance an energy company may offer to lease your property for the purpose of drilling. This arrangement may prove lucrative, but you must carefully consider many factors before signing any legally binding agreement.

For example, you need to find out if the mineral rights on the property do, in fact, belong to you. A Reuters report revealed that developers and homebuilders have been retaining mineral rights for themselves. A thorough title search can help determine with certitude who possesses the rights.

You also need to be aware that companies often secure mineral rights to large areas of land which are then allowed to sit idle, awaiting future consideration for exploration. In order to maintain the lease, a company must demonstrate that they are in some way making progress toward drilling, but they may do as little as parking a vehicle on your land to fulfill that requirement.

Until the oil or gas comes up out of the ground, you may not be getting paid. If the company you are engaged with continues dragging its feet and making no progress by virtue of loopholes, it may be necessary for you to go through arbitration as a means to address the situation.

Energy companies have vast reserves of legal resources to call on to maintain control of leased properties. For this reason, before signing on any dotted line, obtaining legal representation with experience in Texas oil and gas law could be to your benefit. And remember, it is never too late in your relationship with an energy company to seek the counsel of an attorney.

Source:, "Homeowners: How Do Mineral Rights and Fracking Affect You?" Ed Leefeldt, April 5, 2014

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