• Companies generally offer a 12.5% royalty. Owners of desirable properties and landowners who have worked together have also been able to negotiate higher royalties although we have not heard of any exceeding 12.5% in our area.
• Royalty proceeds should be based on gross value, not net.
• Landowners own to the middle of the road but tax roles often do not include this in their calculation of property size. Land owners with significant road frontage should be sure the royalty is based on the correct acreage owned.
• The owner should be guaranteed timely access to accounting/audit data to verify the calculation of royalties. 
• Signing bonuses have been increasing dramatically in the Twin Tiers but the greatest interest is the townships bordering the Pennsylvania border where an infrastructure for transporting the gas is already in place.  The bonus being offered in Lindley, for example, moved from $50 per acre in December 2007, to $200 per acre in April and June 2008, $350 an acre in July and $1,000 an acre in October.
• Contract terms are usually for 5 years with the company having the right to renew for another 5 years. Some residents have been offered 3 year contracts with the right of renewal for another 3 year period. Others have been offered a 5 year contract with no renewal.

• The landowner can increase the distance a well must be from any structures on the property.
• The maximum size of a site and its maintenance should be specified in the contract.
• The land owner should be consulted prior to the establishment of roads, wells, pipelines or other equipment. The landowner may or may not negotiate a right of refusal.
• The NY State Department of Agriculture and Markets has established recommendations for pipeline right-of-way construction projects for agricultural areas. The landowner can require the gas company to follow those regulations, even if the property is not currently used for agriculture.
• We strongly recommend against use of the property for storing gas or oil. Storage is typically established with no end-date and effectively eliminates the land owner from future gas or oil exploration. If a certain proportion of landowners agree to it, the gas company can petition the courts to force others in the area to permit it.
• Disposal of waste or pollution should be addressed in the contract.
• The contract should specify whether the land owner will have access to roads and/or other improvements made by the gas company as well as an understanding of who will pay increased property taxes resulting from those improvements.

Use of Resources

• The contract should specify whether resources such as water, gravel, timber, electricity, gas, oil, etc. will be available to the gas company at no cost or for a fee.
• What remuneration will be paid for the permanent or temporary loss of resources or damage to existing structures?
• Is the lease for 1 formation or strata only (i.e., Marcellus, Utica, Trenton Black River gas deposits? Oil?)

Other Issues

• Force Majeure: This clause was developed to protect one party in the event they are unable to meet the terms of a contract because of "Acts of God," war, etc. It has been expanded in many contracts to exonerate the gas company from its responsibilities for events that may be viewed as controllable such as strikes, problems with suppliers, etc. We recommend that land owners use the wording as originally developed.
• Gas from Other Production Units: Some property owners have negotiated payments when gas produced in other production units is conveyed through the pipelines on their property.
• Contract Type: It is important to understand the legal ramifications of contract terms such as "conditions", "covenants", and "clauses". They can affect the ease of the land owner's right to sue and determine whether or not punitive damages can be awarded.
• Warranties of Title: In some cases, land owners in the 1800s signed away their mineral rights ad infinitum. The typical gas company lease states that the owner warrants title to these resources. We recommend that the land owner strike that clause.
• Contract Interpretation: In recognition that the gas company has a greater understanding of the implications of the legal contract, it should be specified that ambiguous wording or other unclear provisions should be interpreted in favor of the landowner. (Note that this does not absolve the land owner from being informed. Definitions that have been established by law will stand, even if the land owner claims not to have understood the implication.)

A more comprehensive list of issues to consider can be found at: http://www.ccfbny.org/issues/oil_lease/rules_2008_May.pdf