The oil company has advised they will be submitting their offer to us for surface damage compensation on our property (we are surface owners and fraction of mineral rights). The area involved is measured as 5.30 acres on a 54 acre track in Hopkins County. Currently we use the land for growing hay. While they were drilling the well they also ask to disperse the water used upon the surface. Is the surface damage separate from this water dispersal or all considered together. Our property has natural springs in which the oil company is obtaining the water used in it's operations. Does anyone have a range of what would be reasonable/customary amounts for settlement? Thanks in advance.
Do you mean that you allowed them to contaminate your hay crop? Didn't you negotiate and sign a surface use agreement prior to them coming onto your land? Whatever it says about remediation and damages is what you're gonna get.
Good luck,
Pat
T. Valley and Pat:
Lease, Lease & Lease and if the surface owner doesn't own any minerals, it even gets worse, since the surface owner has little to no say so and most if not all the initial offered oil company (Producer's 88) leases give them almost total control to do what they want to do when they want to do it without any input from anyone and especially the surface owner. Scary situation.
A good starting point for surface damages for a well pad is $5,000/acre (upfront) which includes the pad as well as the road access. Water is a whole different can of worms, both fresh as well as potentially contaminated water.
Ms. Pat Malone said:
Do you mean that you allowed them to contaminate your hay crop? Didn't you negotiate and sign a surface use agreement prior to them coming onto your land? Whatever it says about remediation and damages is what you're gonna get.
Good luck,
Pat
Geez, you guys really have me concerned now! There was no surface owner agreement. The original landman basically told my family we had no real rights since the mineral owners trump surface owners. The land is owned by my siblings and I and the mineral rights are owned by four different families (including ours). At the time the landman was getting signatures from the other families, I was taking care of my husband who was my priority and now am trying to figure out what has been done. Here now is my concern based on Pat Malone's comment about the hay. The landman who is doing the surface damage compensation assured the family that the water dispensed on the surface was within the TWC/EPA guidelines. Am I understanding that this was harmful to our land? The water "dump" was from the drilling of the initial hole.
As for use of the underwater springs, are they suppose to compensate for that? Should I get an attorney to review the whole situation before agreeing to any surface compensation? I have been thrown into the lion's den and have no knowledge on this kind of stuff.
Don't waste your money on an attorney. Just get a copy of the lease and read it. The lease will tell you what you will be compensated. As for your springs (groundwater) ... they won't be compensating you for that unless it was negotiated into the lease. I can't comment on what they poured downhole and I'm not going to guess. It just makes me madder than heck that these operators get away with so much on the landowner's property. But, the landowners don't always understand, or maybe they don't care, that they have the right to read, ask questions, and negotiate the lease terms before signing away their rights. Buyer beware so to speak!
Good luck,
Pat
The contract says nothing about surface damage compensation at all. Should we request a contract regarding the surface use? They have already placed the road and oil well/pump/tanks.
T. Valley:
Remember that the advice and or replies you get from this forum for the most part are based on experience and understanding we have gathered over the years. Speaking for my self only; but, IMHO, Pat nailed it. As I said in my initial post, it is Lease and more Lease and if it isn't in the lease, you are totally at the "good will" of the operator and his landmen counterparts. Again as Pat said above, when I read most of these leases that are shoved under people's noses, I actually get sick to my stomach just thinking that some unsuspecting souls are going to actually sign this and it happens every day. If you have read the lease and can't find anything, then more than likely you just have to grin and bare it. As for the use of water, if it isn't in the lease, I believe they have the right to use,use and use. The only thing that might be questionable is them dumping their already used down hole water on your surface and a lot has to do with from what depths the water is coming from and if the water truly meets all the Clean Water requirements set by the EPA. This one could cause them some real headaches if you decided to push back.
Good Luck!
T Valley said:
The contract says nothing about surface damage compensation at all. Should we request a contract regarding the surface use? They have already placed the road and oil well/pump/tanks.
Dear T Valley,
With regrets, it's too late to do anything because the contract (lease agreement) has been signed.
It may be a good sign that the lessee is willing to pay you something for damages. Here are a few damage reimbursement you might consider asking: costs for remediation and preparing your land for hay, ex., re-cultivating the soil, herbicides, fertilizers, seed, time/labor, etc. Any lost income? Add that dollar amount to your list. Did the county take your land out of AG? Sometimes this happens. If so, ask for reimbursement for that "important" tax loss.
Don't forget to ask that they categorize your damage payment check as ALL DAMAGES. Damages are considered to be a tax deductible item.
Good luck,
Pat
Pat is right. The ship has sailed for adequate compensation.
But just to look at the hay, let's say that your yield is 105 small bales per acre per crop. Over the years, you average 1.5 crops per year. That is a total of 155 small bales per acre per year. Without alfalfa you might get have a replacement cost of say $5.00 per bale per year. So, at $5.00 per small bale, your replacement cost is 5.3 acres x $5.00 per bale x 155 bales per acre = about $4100 per year.
That does not include the road.
The road not only takes productive land, but unless the road is on a pasture fence, you double your turning rows for planting and harvest.
This is why you negotiate this into a lease. To take a flat fee is fine, but be aware that there might be 30 years of production with multiple sites.
Don't let them flood your property with drill water. Have them dispose of the cutting down the annulus and the water off site if possible.
Best
Buddy Cotten
Thanks everyone. Hard lesson to learn but hopefully our loss will help others when dealing with the oil companies.
Here is a helpful post on Surface Damages for Oklahoma mineral owners.
http://www.berlinroyalties.com/oil-gas-minerals-royalties-educational-blog/
Parker
Thanks for the info!
Another dumb question. As I was going thru emails, I found where I inquired with the original landman about the surface lease which he never responded. As I said, during this time was when my husband got sick so all focus went on him and I never followed up. The contract we signed on the mineral rights was the same that all four families signed who own mineral rights. Can I use this fact to push a surface lease agreement?
No, it's too late for any type agreement. BUT ... if you re-read the previous emails, you may be able to use them to generate a "Request for Surface Damages" letter. Reference your legal description and Just detail/list all your loses and the estimated costs to reimburse and remediate your land (see emails above.) Certify mail a paper copy to, each, the landman and the operator. You should also include that "you never gave them your permission to dump any downhole water on your land, now or in the future, and that they should stop, immediately.
I understand how you feel about this. It's not your fault. You had your priorities to tend to! Everything will work out for the best!
Good luck,
Pat