I Received an Offer To Sell My Marcellus Shale Gas Rights for Thousands of Dollars Per Acre?

Many Landowners across Pennsylvania are receiving solicitations by companies, partnerships and even hedge funds seeking to purchase their oil, gas and mineral rights. If you are ever seriously considering selling any of your oil, gas and mineral rights, your must contact an experienced oil and gas attorney to review the offer and Agreement of Sale before taking any other action. These offers are strongly slanted to the company seeking to buy your rights and the Agreements of Sale are designed to allow the company flexibility to withdraw or delay the offer. There are many legal tricks and serious pitfalls in these offers and Landowners cannot rely on the company or entity seeking to buy their rights to treat them fairly. The company is seeking to buy the Landowner’s oil and gas rights at the lowest rate possible and to provide as themselves as much flexibility in the offer as possible.

I hold the general position that Landowners should avoid permanently selling their oil gas and mineral rights. However, I recognize that an individual’s financial needs, lack of heirs or beneficiaries, and other personal factors may justify permanently selling their oil and gas rights. If you are debating whether to permanently sell your oil, gas and mineral rights, you must consult with an experienced oil and gas attorney with an understanding of the marketplace and who can assist and counsel you on this very important decision. There are many companies seeking to buy oil, gas and mineral rights in Pennsylvania and some are far more reputable than others. Also, Landowners can typically negotiate higher compensation and better Agreement of Sale terms and Deed language as a result of competition to purchase oil, gas and mineral rights in Pennsylvania.

Landowners must be very careful in this arena. I do not want to see any Landowner make an uninformed decision that they may regret for the rest of their lifetime and that will negatively impact generations into the future. Landowners must fully understand and explore the potential positive and negative consequences of their decision before signing an Agreement of Sale for their oil and gas rights. Remember, no company or entity will offer to purchase your oil and gas rights for thousands of dollars per acre unless they were very confident that the potential future value of those rights significantly outweigh their investment costs. They did not get millions of dollars to invest in purchasing oil and gas rights by making foolish decisions.

I want to be clear that my general position is that Landowners should generally not sell their oil, gas and mineral rights, but there certainly are legitimate exceptions. Should a Landowner decide that permanently selling their oil and gas rights is in their best interest, I strongly recommend that the Landowner consider selling only a portion of their rights as opposed to selling their entire oil and gas interests.

For example, an individual who owns all the oil and gas rights to 50 acres may consider selling only 20 acres or their rights, or any other amount between 1 and 50 acres. By selling only a portion of their rights Landowners leave open the possibility of future royalty benefits while obtaining needed short term cash.

I have unfortunately seen far too many occasions where Landowners have sold their oil and gas rights for quick money only later to learn that their property has begun producing gas and they will not receive any royalty benefits. Instead, the company that purchased their rights will now receive any monthly oil and gas royalty checks for the lifetime of the property. This can be a real painful situation for the Landowner and their heirs. In most cases I have seen, the potential oil and gas royalty benefits far outweigh the short term financial gain of permanently selling your rights.

In closing , I believe far too many times Landowners are taken advantage of by these solicitations and those who agree to sell their rights do not fully understand the permanent ramifications of their actions. Whether to sell your oil, gas and mineral rights is always an individual decision for each Landowner. However it is critical that the Landowner receive qualified professional assistance and fully understand the permanent impact of their decision.

Douglas A. Clark ‐ Pennsylvania’s Landowner Lawyer