Without question the Shale Revolution has helped propel Pennsylvania’s economy since it’s earliest days in the mid 2000’s. The fuel driving this expansion was asset acquisition in the form of leases, predominately acquired from 2009-2016, at ever increasing bonus prices. As lessors gained sophistication, the market, and terms within the lease itself, evolved. In the early days, leases were standard forms containing a primary term of five years, with the option for the company to extend for an additional five years. As competition intensified, companies opted to offer Landowners leases with just a straight five-year primary term.  The intent of these leases was that their acreage would get drilled and included in a unit or that ever-rising bonus prices would result in a second windfall at the end of the term. 

What was not anticipate in this period, specifically from 2013 to 2016, were protracted natural gas prices, mergers, defaults and other outside factors that would stall the market and muddy the market outlook. Indeed there are many more years of development across the shale play in Pennsylvania, but the market is at an interesting juncture. For the next year and a half, the potential acquirable land assets are high and coincidentally so are landowner bonus expectations. The one variable preventing the next boom-leasing wave is market prices as they dictate cash flow and CAPEX.  

The main question is what options are available to owners of the Oil and Gas Estate? The answer lies in the terms of the original lease executed with an operator. Should that lease have an extension clause, the landowner can sit back and collect another “bonus” check should the operator elect to pay. If the operator does not pay, then the landowner is free to pursue a new lease with any operator willing to lease. If the lease does not contain automatic extension then things may get interesting. It is easy to understand that those with straight five year terms are free to lease their property if it is not in production. But what about all of those other interesting lease terms in the lease Addendum that grew popular as the last leasing wave swept the countryside? Does your lease have a Pugh Clause? Is it Vertical or Horizontal? Does your lease contain a pool all? These questions matter and here at The Skeen Firm we are ready to answer them and help you make the right decisions regarding your Oil and Gas rights moving forward. 

 Call today, at 724-550-6970, or email at info@theskeenfirm.comto schedule a consultation to discuss your lease form and options moving forward. Leverage our industry experience for your advantage.  

*Disclaimer: The advice provided is for informational purposes and is not intended as legal advice.  It should not be relied on, nor construed as creating an attorney-client relationship.