cifi c rules for fi res should be included in an express agreement. “If the company sets a fi re — we know grass takes 3 to 4 years to grow back — the agreement should specify the company must pay for that grass,” Nickum says. “If it burns your barn, they must pay for it — if that’s part of the agreement. Penalties should be specifi ed in the express agreement.” Oil companies are certainly experts at knowing
what a landowner may want in an SUA and all its addendums. “They are so used to these agreements that they will agree to them,” Nickum says. “They want the minerals under the lease. As long as your agreements aren’t totally egregious they will agree to them.”
Have a good negotiator Oil and gas lease terminology can be confusing
enough. Throw in newer rules for horizontal drilling and it becomes even more complex. “Long cross-lease laterals, tremendous pressures and fractures produced by high-pressure fracture stimulation completions and much larger surface damage all present issues that must be addressed in a custom drafted lease or addendum,” Nickum says.
The landowner’s attorney must understand the
form of the lease that is needed, and the money that is available. “Not offered, but available,” Nickum adds. “Some landowners assume the role of negotiator when it comes to bonus and royalty and request that the at- torney negotiate the form of the lease. Others want the attorney to negotiate the entire deal. “Either approach is fi ne. Like most horse traders, you
start high, but you don’t want to lose the deal. Along the way you have to know what to give up, and what to insist on having.” Fitzsimons says, “What we attempt to do with an
SUA is to level the playing fi eld between the mineral owner and the surface owner. “The best way is to make sure an SUA is a condition
of the original oil and gas lease. If you can’t do that, it’s going to be at some disadvantage. That’s the key.” The attorneys all agree that a well-negotiated oil and
gas lease can certainly benefi t ranchers. And Nickum, who like other cattlemen has battled drought in recent years, quips over a familiar cowman saying. “We often need mineral supplements,” he says.
“Well, the best mineral supplement I know of is a royalty check.”
tscra.org
March 2014 The Cattleman 97
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