Tips for Negotiating with Oil and Gas Companies
As former project manager and attorney for companies in the oil and gas industry, McNamara | Attorneys at Law’s own Jerad Zibritosky has a few thoughts to share about how to approach negotiations with oil and gas companies.
- Learn about the people and companies reaching out to speak with you. Oil companies often contract with third party land service providers (often called landmen) to negotiate leases and/or pipeline easements. This creates an immediate issue regarding the landman’s authority to bind the oil company to terms of any agreement. A shrewd landowner will be sure to find out if the landman at their front door is an employee of the oil company or an independent contractor working for a land service provider. Generally, a landman that is an employee of the oil company may be better able to change terms or conditions of an agreement with the authority and approval of the oil company. Independent landmen are not generally able to change the terms or conditions of any agreement without express consent from the oil company itself.
- GET EVERYTHING IN WRITING. If you want to negotiate a term or change anything in any lease, or easement or other agreement, every landowner, every time, must see that change in writing. If you do not see the term you want in writing, it does not exist and will not help you protect your interests. Leases and easements are read and interpreted by the language used in the actual document, not on assurances or promises made orally or off the cuff by a landman in person or over the phone. We recommend you correspond with landmen and oil companies by written correspondence to maintain an appropriate paper trail of any negotiations or changes to the deal. Even when you write and collect letters and emails with terms and desired changes, you should never sign any instruments or contracts unless and until every term, addition, or change is expressly included in the document you are about to sign.
- Learn the jargon. The oil industry is now different than any other industry. It has its own jargon and lingo that may be confusing to an outsider. If you are unsure of the difference between “net” or “gross” when calculating royalties, it is difficult to make sure you get the best deal. Similarly, if you don’t understand “pooling” or what a “Pugh clause” is, it might be best to come see Jerad Zibritosky at McNamara | Attorneys at Law to help explain the lease and help negotiate the best deal.
- Work with a lawyer you can trust. The best way to make sure your interests are protected is to speak with a knowledgeable attorney familiar with the ins and outs of the oil and gas industry. We provide free 20 minute initial consultations for you oil and gas needs. You can reach us at 330.699.6703 or stop by our office located at 12370 Cleveland Avenue, N.W., Uniontown, OH 44685 to schedule a time to talk with Attorney Jerad Zibritosky about any oil and gas matters.