Many lease offers come stamped with a “Producers 88” notation on them suggesting that the lease offer is the same, standard form that’s been around for generations. However, don’t be fooled by a lease stamped with “Producers 88.” Lease offers today are a far cry from the lease form signed by generations back. Today’s leases contain many clauses that tilt an oil and gas lease even further in favor of the oil and gas company than any historical rendition of a Producers 88 lease.
What lease terms have you witnessed recently that you didn’t see 10, 25, or 50 years ago?
Many of today’s lease offers stamped with “Producers 88” eliminate protections under the law that might otherwise exist for land and mineral owners. First, these modern leases often weaken or eliminate the implied covenants intended to protect land or mineral owners. Second, many leases purport to limit the remedies of land and mineral owners drastically by providing opportunities for companies to correct their breach and limit the time periods within which you can bring a lawsuit, which may effectively leave a land or mineral owner with little recourse in many instances. Finally, leases increasingly limit the rights of land owners by seemingly allowing them to only use their property in a way that does not interfere with their oil and gas operations.
What do I do to protect myself?
If you receive a lease stamped “Producers 88,” don’t assume that it’s a standard lease form. If your family has owned the minerals for generations, pull out a copy of that old lease and compare it to your present offer. Identify any “new” terms and consider asking for their deletion if it makes sense. Also, consider asking for the deletion or revision of clauses that limit your ability to redress breach of the lease or clauses that purport to grant the company unfettered or absolute discretion on marketing, development or similar. Next, be cautious of any clauses that purport to limit the use of your property. Finally, if you don’t understand a clause on the lease or doubt the answer given by a landman (remember their job is to lease your acreage), then ask a qualified professional or research the issue further to ensure that you know how the term potentially affects your rights.
Jenna H. Keller, Esq.
Attorney at Keller Law, LLC. (www.kellerlawllc.com)
Jenna H. Keller defends property rights and provides legal services to farmers, ranchers, rural property owners, and severed mineral interest owners in the areas of estate planning, natural resources (oil, gas, wind), real estate, and water.
The information in this article is for general information purposes only. This article should not be substituted for legal advice and should not be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or reading this article does not constitute, an attorney-client relationship. You are encouraged to contact an attorney for legal advice concerning the information provided in this article.