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Caution urged on mineral leases

PARKERSBURG, W.Va. – A burgeoning oil and gas industry has raised concerns, questions and some legal issues among the owners of mineral rights who have leased their land or are considering leasing.

Consumer advocate attorneys urge landowners/mineral rights owners to be cautious.

Attorney Dave McMahon, co-founder of the West Virginia Surface Owners Rights Organization, urged everyone to be informed before signing anything.

“One thing I say to people who do own their minerals is to hire a lawyer with experience in the area to review the lease and perhaps negotiate for you,” he said. “You buy insurance for your house, and insurance for your car, you need to pay a lawyer some of what you are about to get for signing the lease as insurance you are not creating a disaster for you and your children and grandchildren by what you sign,” McMahon said.

Julie Archer, with the WVSORO, said the group tries to connect individuals with experts and other resources to help them make informed decisions.

She said for those considering leasing the importance of educating themselves, getting legal advice and not being rushed into making rash decisions cannot be overstated. When it comes to leasing, the money may be attractive, however money is here and gone and folks need to think long term, Archer said.

“The land will be here forever and the decisions they make now about whether or not to lease, or if they lease, what terms they agree to will affect future generations.

“There are a lot more resources available for landowners than there were during the initial Marcellus leasing boom and many folks who signed leases then exactly as they were presented to them by the companies are sick at heart so there’s no excuse for not doing your homework,” Archer said.

The group’s website at includes six tips to consider before signing a lease.

The WVSORO is a statewide membership organization whose mission is to protect landowners. The organization was formed in 2007 by concerned landowners, McMahon and West Virginia Citizen Action Group. Members come from 51 of the state’s 55 counties and 26 other states.

According to the WVSORO, West Virginia is second only to Texas in the number of active oil and gas wells in the country. New drilling permits have more than tripled in recent years and West Virginia surface owners have very few rights to protect them from drillers unless they also own the minerals beneath their land.

According to The West Virginia Record, residents in several West Virginia counties have filed lawsuits against oil and gas companies alleging harm to their land when the companies drilled horizontally into it. The plaintiffs are seeking punitive damages, costs and other relief.

Wood County Clerk Mark Rhodes said there were some concerns locally a few months ago with an oil and gas company that was requiring, as part of its agreement, that mineral rights owners perform their own title searches.

The clerk offered some tips to avoid problems and included a warning to be wary of companies that send a lease which expects the mineral rights owner to perform their own title search.

“Your lease should have the owners listed north, south, east and west of your property. The lessee should provide the legal description of your property including the tax district, map, parcel and amount of acreage that is involved. This information can be verified from your real estate tax ticket,” Rhodes said.

The clerk cautioned mineral rights owners not to rush into signing a lease.

“The lease you sign could bind any future owners, including spouse and children. A small investment in an attorney to review the lease could benefit you in the long run. You pay insurance to protect your assets; the attorney you pay is going to protect your assets,” Rhodes noted.

The lease should cover all rights, oil, gas and minerals. If the lease covers natural gas only, and butane or methane is discovered, you may have to negotiate a new lease, Rhodes said.

“Speak with your neighbors. Leasing companies will also be contacting them. By communicating, you may be able to get a better price for the total acreage, or at least everyone receive fair dollar per acre,” he said.

Rhodes noted county clerk’s office employees cannot give legal advice nor perform title searches.

“We will assist you by showing you where to begin. You should first review your current deed to see if it lists the mineral rights. If it does not, you must work your way backwards to the deed that lists the mineral rights. You then must work your way forward to see if the mineral rights have been separated from the land. It can be simple or very difficult to determine ownership,” Rhodes said.

Numerous times the ownership gets transferred upon death of an owner. If the decedent had a will, then the transfer is completed as directed by the will. If no will is located, the property is divided as to the law of distribution per West Virginia State Code.

Distribution laws have changed throughout the years, and property has to be distributed according to the law in effect at the time of the person’s death, he said.

“Currently if there is a surviving spouse, you have to check the deed to see if it is a survivorship deed. If so, the property transfers to the spouse. If it is not a survivorship deed, the property transfers to the spouse, but if the decedent had children from a previous marriage, then the surviving spouse gets 50 percent and the children from the previous marriage divide 50 percent. Ownership can pass through many generations and be divided for each generation. There have been many leases recorded where the person is signing 1/64th of an interest in the oil, gas and mineral rights. Genealogy work must then be performed to determine the family tree, percentage of ownership, and then locate the heirs,” Rhodes said.

“The county clerk’s office can ensure a document is legally recordable, but cannot ensure it is a legal document. The county clerk’s office must walk a thin line between providing assistance and practicing law,” he said.

The Oil and Natural Gas Industry Labor-Management Committee commissioned a study through the Institute for Construction Economics Research which was released in October. The study, done by Dr. Robert Bruno, director of the Labor Education Program and Professor of Labor and Employment Relations at the University of Illinois at Urbana-Champaign, stated Marcellus Shale development in Pennsylvania, Maryland, West Virginia and Ohio “has been a strong engine of job growth” in the local construction industries in those states.

The study, which looked at natural gas/Marcellus Shale employment data from 2008-2014 for parts of West Virginia, Ohio and Pennsylvania, found more than more than 45,000 new construction jobs linked to the Marcellus Shale industry were created. From 2012-2013, spending in the Marcellus area on construction and maintenance grew more than 60 percent, according to the study.


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