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2 reasons to retain an attorney before leasing mineral rights

An oil and gas extraction company has approached you and is eager to offer you a signing bonus in exchange for a lease to drill exploratory wells on your California property. The money may be enticing, but what does the lease say? Will you actually benefit from the terms? We at Ehrlich • Pledger Law, LLP, are intimately familiar with state and federal laws regarding oil and gas leases and extraction, and have often assisted landowners throughout the leasing process and beyond.

According to Geology.com, unless you have the necessary knowledge, skill and patience, your mineral rights deal is unlikely to be successful. Experts point out two reasons you should consider hiring legal counsel before you sign anything.

1. You may be able to get a higher royalty percentage

Typically, the percentage of royalties is an eighth of the oil or gas value at the wellhead, or else 12.5 percent. However, this is not a locked-in figure, and if your property is considered highly desirable or you have strong negotiation skills, higher percentages may be possible. An attorney who is skilled at negotiating royalty percentages may be able to help you get a higher rate.

2. If a dispute arises, you already have legal counsel you can trust

Even though you and your attorney have pored over your agreement and ensured that the terms are favorable to you, the extraction company may try to breach the contract and claim you are in the wrong. Because your attorney is already familiar with the contract and your rights, he or she will be able to identify the breach and represent you in mediation, arbitration or before a judge.

More information about oil and gas transactions and disputes is available on our webpage.

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