Owning land in West Virginia can come with more than just scenic views—it may include valuable mineral rights beneath the surface. If a company approaches you with a mineral rights lease agreement, it might seem like a great opportunity. But before signing anything, it’s important to understand what you’re agreeing to and how it could affect your land long-term.
Key Clauses to Look For in a Mineral Lease
Not all leases are created equal. Some contracts favor the drilling company, while others provide stronger protections for the landowner. Here are a few critical terms to watch:
- Royalty Rates: This is the percentage of profits you’ll receive from extracted resources. Make sure the lease clearly spells out the royalty structure, payment timing, and audit rights to verify accuracy.
- Lease Duration and Extension Terms: Pay attention to how long the lease lasts—and whether it can automatically renew. Some leases include extension clauses that lock in long-term use with little input from the landowner.
- Surface Use Agreements: Will the company be allowed to build roads, install pipelines, or set up drilling equipment on your property? These details matter. A separate surface use agreement can help protect your land from unnecessary disruption.
- Shut-In Clauses: Some leases allow companies to delay production while still holding the lease active. This can affect your payments and land use.
Understanding Royalty Payments
Royalty payments are typically based on a percentage of the value of the minerals extracted—usually oil, gas, or coal. However, the calculation can vary based on deductions the company takes out for transportation, processing, or equipment costs.
Make sure your lease includes a clear explanation of:
- What qualifies as a royalty-producing event.
- When and how payments will be made.
- Whether deductions are allowed—and if so, which ones.
Without clarity, royalty checks can end up being far smaller than expected.
Protecting Your Land from Environmental Damage
Mineral extraction can be hard on the land. Roads, well pads, spills, and heavy equipment can all take a toll on your property if not managed properly. To safeguard your land:
- Negotiate a detailed surface use agreement or add protective language to the lease.
- Require restoration clauses that obligate the company to repair any damage.
- Limit access to certain areas of your property, like streams, farmland, or residential zones.
Having legal guidance during this process can help ensure the lease works for you—not just the drilling company.
Signing a mineral rights lease can be a smart financial move, but only if it’s done with full understanding of the terms and long-term impact. If you’ve been approached with an offer or already have a lease in hand, Persinger & Persinger can help you review the agreement, negotiate fair terms, and protect your rights as a landowner.
Note: This blog is for informational purposes only and does not constitute legal advice. For guidance specific to your situation, contact Persinger & Persinger to learn how we can help.
