By SHELLY STRAUTZ-SPRINGBORN
Michigan Correspondent

HART, Mich. — Michigan landowners may learn about mineral and wind energy leasing during a free public meeting from 6-8:30 p.m. April 28 at the Fruitland Township Hall, located at 4545 Nestrom Road in Whitehall, in Muskegon County.
Curtis Talley Jr., Michigan State University extension educator in Oceana County, said landowners should be aware oil and gas leasing representatives are mailing unsolicited letters to people in the area offering to lease “oil, gas and minerals.”

“The letter offers a cash bonus and very minimal lease terms,” Talley said. “The letter states that if they sign and return the offer, they are accepting the lease terms and will sign the lease. However, there is no lease document to review, so the landowner is approving a lease that they have not yet seen.”
Talley said landowners should be aware when they sign the lease, they are essentially selling the mineral rights. He cautions landowners “to be extremely wary of these offers.

“Would you sell your land surface without knowing how you are going to be paid?” he said. “When it comes to leasing your minerals for land or wind energy, the devil is in the details. We want to warn landowners that signing and returning these types of letters without a review of the underlying lease by an experienced oil and gas attorney can result in a very poor lease.

“Unfortunately, these types of offers are becoming more common around the state.”

According to Talley, almost every aspect of a lease is negotiable, and landowners should not be rushed into making a decision. No standard lease form is universally recognized; instead, each company has a pre-drafted agreement. These agreements are not necessarily in the best interest of the landowner.

“Knowledge really helps people negotiate better leases,” he said. “When landowners sign a lease, they can be stuck with it for many years.”

Among other things, signing the lease can result in a lack of environmental protections, substantially less income to the landowner and little input as to what occurs on the property after the lease is signed.

Talley said terms of many of these leases have changed throughout the years.
“In the good old days – 20 or 30 years ago – the landowner would get an upfront payment and each year they would get so many dollars an acre,” he said.

“Most leases now are called paid-up leases. They don’t get the payment per acre anymore.

“Instead, the only cash payment they get before the royalty – when a well is put in and starts producing – is the cash bonus.
The royalty depends on the well. If it’s not a good well, the landowner may get one payment per year. If it’s a better well, it’s not uncommon to get a payment every month.”

They key, he said, is for landowners to educate themselves at the outset. Extension provides extensive information for landowners to educate themselves on mineral rights leasing, for free. The information is available on the Internet at www.msue.msu.edu/oilandgas