Landowners Should Be Careful Before Making Representations About Prior Oil and Gas Development on their Property
Before signing oil and gas leases, landowners should pay close attention to lease provisions asking for warranties and representations about prior oil and gas development on the land. These provisions are often buried in a lease and frequently get overlooked in negotiations over signing bonuses and royalties. But, these lease clauses, frequently asking landowners to agree that there has not been prior oil and gas development on the property, should not be disregarded. Many times, landowners have no idea about prior oil and gas development on their property and making representations about those types of issues can cause problems.
On July 18, 2022, the Pittsburgh Post-Gazette ran an article entitled “A shale well met an abandoned well a mile away. How did it happen?” According to the article, on June 19, 2022, a Greene County, Pennsylvania landowner “noticed a geyser shoot up 15 feet above the ground on his property” and, after the geyser died down, the landowner “could see water rushing underground through a sinkhole that had formed around an old, abandoned gas well.” Whatever the root cause of this dramatic scene, it is useful to identify a broader issue, which is that the long-history of oil, gas and mineral extraction in Pennsylvania is not something buried in the past.
Pennsylvania is littered with hundreds of thousands of orphaned and abandoned oil and gas wells. Whether this Greene County episode was caused by the interplay between hydraulic fracturing of a new well and the presence of an old abandoned well is unclear. But, as the Pittsburgh Post-Gazette article notes, it is not unheard for stimulation and production activities associated with deep wells to impact conventional wells in the vicinity. If an oil and gas owner makes representations in a lease that a particular property does not have any wells on it, then it is possible that a driller could argue that the oil and gas owner is liable for damage to a property like the geyser and sinkhole described in the Post-Gazette story. A driller could argue that its due diligence for potential old wells on a property relied on the landowner's representation that there were no wells on the property and that representation turned out to be untrue.
Whether or not gas companies would make such an argument in the event of damage to a property caused by communication between old and new wells is a question that is not at-hand. But, for landowners, there is no need to even deal with that headache. Oil and gas owners should pay close attention to lease provisions that ask for representations about the existence and nature of prior oil and gas development on a piece of land and consult with experienced oil and gas counsel to address those types of provisions in a way that minimizes or eliminates representations by oil and gas owners that could pose liability concerns down the road. If you have been offered a lease, contact oil and gas attorney Brendan A. O'Donnell at 412-288-2226 or firstname.lastname@example.org to talk through these issues and all other leasing concerns.
Oil and gas development can present unique and complex issues that can be intimidating and challenging. At Houston Harbaugh, P.C., our oil and gas practice is dedicated to protecting the interests of landowners and royalty owners. From new lease negotiations to title disputes to royalty litigation, we can help. Whether you have two acres in Washington County or 5,000 acres in Lycoming County, our dedication and commitment remains the same.
We Represent Landowners in All Aspects of Oil and Gas Law
The oil and gas attorneys at Houston Harbaugh have broad experience in a wide array of oil and gas matters, and they have made it their mission to protect and preserve the landowner’s interests in matters that include:
- New lease negotiations
- Pipeline right-of-way negotiations
- Surface access agreements
- Royalty audits
- Tax and estate planning
- Lease expiration claims
- Curative title litigation
- Water contamination claims
Robert Burnett - Practice Chair
Robert’s practice is exclusively devoted to the representation of landowners and royalty owners in oil and gas matters. Robert is the Chair of the Houston Harbaugh’s Oil & Gas Practice Group and represents landowners and royalty owners in a wide array of oil and gas matters throughout the Commonwealth of Pennsylvania. Robert assists landowners and royalty owners in the negotiation of new oil and gas leases as well as modifications to existing leases. Robert also negotiates surface use agreements and pipeline right-of-way agreements on behalf of landowners. Robert also advises and counsels clients on complex lease development and expiration issues, including the impact and effect of delay rental and shut-in clauses, as well as the implied covenants to develop and market oil and gas. Robert also represents landowners and royalty owners in disputes arising out of the calculation of production royalties and the deduction of post-production costs. Robert also assists landowners with oil and gas title issues and develops strategies to resolve and cure such title deficiencies. Robert also advises clients on the interplay between oil and gas leases and solar leases and assists clients throughout Pennsylvania in negotiating solar leases.
Brendan A. O'Donnell
Brendan O’Donnell is a highly qualified and experienced attorney in the Oil and Gas Law practice. He also practices in our Environmental and Energy Practice. Brendan represents landowners and royalty owners in a wide variety of matters, including litigation and trial work, and in the preparation and negotiation of:
- Pipeline right of way agreements
- Surface use agreements
- Oil, gas and mineral conveyances