Some commonly asked questions about natural gas leases. Answers are provided by Earle Robbins, of the Penn State Cooperative Extension in Tioga County, and attorney Lester Greevy, of Williamsport.

Q: Where can I find out if natural gas companies are leasing in my area?

A: Start by contacting your closest Agricultural Extension Office. Pennsylvania has a Gas Team and your extension agent will be able to direct you to the right place to acquire the information you need.

Q: What is a landman or land representative?

A: A landman, also called a land representative, is an agent who works for a drilling company, or is contracted by a drilling company or broker. Their mission is to negotiate the lowest possible lease price and most advantageous terms for the natural gas drilling company. During a “play” hundreds of landmen may converge on an area to quickly close leases before landowners realize the value of their mineral assets. When the landman comes, it is time to seek qualified legal assistance. You may be signing a deal that is more valuable than the value of your property itself.

Q: What is an addendum? Why is it so important?

A: Although a natural gas drilling company isn’t trying to “stick it to you,” leases are drawn up to favor the company. For example, many leases have an extension clause whereby the lease automatically renews after the primary term ends... At the same price, or less. A properly written addendum can change that to give the company the right to match the offer of another company, if the value of the lease increases.

Q: Do I need an attorney? If so, what type?

A. An attorney with experience in natural gas law is your best assurance to get the most out of your gas lease agreement.

Q: What is a pool?

A: It is a term in gas and oil production and Pennsylvania Gas and Oil Law. A pool or unit is the area from which an actual well would draw its gas or oil. Think of it as an underground pond. If half the pond of gas is below you and the other half is below your neighbor, when a well is bored you and your neighbor would comprise the pool, or “production unit.” You and your neighbor share the royalty money from the gas well 50/50.

The unit is based on the geological formation below the surface of your land. It is determined by geologists and that information is submitted and reviewed by the State.

Q: The price per acre... Is that per month or per year for the term of the lease?

A. Simply put: If you have 100 acres and you sign a five-year (negotiated), paid-up lease at $750 per acre then you will get a check for $75,000 one time only between 30 and 90 days after signing. You will not get any more money in the primary term until something else happens. If they move in to start a well, you will get well-sitting money. You could be entitled to delay-rentals or shut-in payments during certain set of circumstances, if that was negotiated. If the well produces gas, you will get monthly royalty payments based on a percentage of the well’s production.

Q: I only own four acres and my neighbors have signed a lease. Are the companies interested in my little piece?

A: Although you may never have a drill rig on your property, if your property is in a pool, or drilling unit, you are due royalties based on the number of acres you have in the pool. Yes, the companies are interested, and unless you have specific reasons not to lease, leasing could prove rewarding if gas is produced from your pool.

Q: What are the primary and secondary terms of a lease?

A. The primary term of a lease is from the time of signing until the secondary term, or until the end of the lease, which is typically five years. The secondary term of a lease is after drilling and during “production” or “operations.”

Q: What provisions extend a lease?

A: Shut-in, pipeline and storage provisions extend a lease, all of which should be negotiated upfront.

Q: When are “operations” or “production” completed?

A: “Operations” or “production” is completed when a well is plugged. Completion can be defined in a lease.