Should I obtain an override with a new surface use agreement?

Oil and Gas Leasing Help
1

My family has land and mineral interests in the Permian Basin. The current lease grants us 20%. There are now eight vertical wells on the property. Several new horizontal wells are planned. They will be located on our property but may extend onto neighboring lands. A new surface use agreement is required to permit oil from neighboring lands to be produced, stored, processed, transported, etc. on our property. Is this the time to insist on an override? What percentage is standard in such a situation?

2

Are you sure you need a surface use agreement? Or do you need a sub-surface right-of-way agreement?

3

I have never heard of anyone being able to negotiate an ORRI for allowing a company to access their land for trespass purposes. Who knows, maybe you will be the first.

I would instead concentrate on negotiating an agreement with them which would maximize the amount paid for crossing and utilizing your land and a surface use agreement would be the ticket.

Concentrate on making that agreement yield annual fees and not a one time payment and have clauses to address where they go, what exactly they can do and what the damages are.

I would not advise negotiating without some professional help.

Dirk

4

I understand the agreement will address surface use and grant an easement for the subsurface

Marsha Breazeale said:

Are you sure you need a surface use agreement? Or do you need a sub-surface right-of-way agreement?

5

Check your lease terms. They most likely cover all well spacing that includes your minerals. For wells collared on your surface for well spacing that does not include your minerals, surface use may not be included in your lease terms. If not included, you must be compensated for surface use. If you can work out an ORRI as fair compensation for the use of your surface, have at it. In the Permian with all the wells on your land, its worth a try. Just be careful you don't compromise any other surface use agreements for grazing or agricultural purposes. That could be more costly than the ORRI.

6

Dirk

I've seen it used several times in separate surface use agreements. They are normally only for surface owners that do not own an actual mineral interest in the tract.



Dirk Dieterich said:

I have never heard of anyone being able to negotiate an ORRI for allowing a company to access their land for trespass purposes. Who knows, maybe you will be the first.

I would instead concentrate on negotiating an agreement with them which would maximize the amount paid for crossing and utilizing your land and a surface use agreement would be the ticket.

Concentrate on making that agreement yield annual fees and not a one time payment and have clauses to address where they go, what exactly they can do and what the damages are.

I would not advise negotiating without some professional help.

Dirk

7

Thanks Jordan, I would think that the oil company would have to be desperate and unfortunately I have never had the pleasure of having one in that situation. I will remember that and hopefully use that some day. Thanks for the advice.

Dirk