Landowner Kindness, Loyalty and Trust

Great Qualities, but Not During Marcellus Shale Contract Negotiations

Growing up in rural Western Pennsylvania my parents instilled in me many values and characteristics that I am very proud of today.  Since moving to Eastern Pennsylvania about seventeen (17) years ago and meeting and working for many landowners across the state, I have seen firsthand that kindness, loyalty and a person’s word serving as their bond are qualities shared throughout the state, especially in rural areas.  

When a farmer agrees in a conversation to sell two hundred fifty (250) bales of hay out of the field for Two Hundred Fifty ($250.00) Dollars, both parties have "given their word" and the deal is done.  These gentlemen do not need formal written contracts with attorneys drafting terms and an integration clause.  Many landowners have unfortunately learned the hard way that handshake agreements  are a thing of the past when dealing with natural gas and pipeline companies.  Oil and gas industry is big business and often involves complex contracts and agreements that are negotiated often over a lengthy time period.  Landowners must unfortunately realize that gas  and pipeline company negotiations are complex and adversarial.  

Remember, natural gas companies have secured gas leases, pipeline right-of-ways, and many other landowner contracts across the country for over one hundred (100) years.  The gas companies and their representatives have tremendous experience dealing with rural landowners and understand how landowner’s admirable character traits may be used by the company to their advantage during the negotiation process.  Traits like kindness, loyalty and trust are often manipulated in the negotiation process to secure a more favorable company agreement.  

Far too often landowners tell me that the landman is "a really nice guy" and that they have reservations in asking for certain terms or do not want to rock the boat.  I have heard many times that the landman told the landowner that he or she were "going to lose their job" if they could not get the landowner to sign the oil and gas lease, pipeline agreement, or other Marcellus Shale Agreement.  Of course if this type of guilt negotiation does not work, you may hear a subsequent fear tactic that the company "will just work around you" or "we will just take your gas from your neighbor's property."  Landowners should not enter into agreements out of guilt or fear.  Landowners should reach agreements because they are fully informed and feel that the ultimate agreement is in their personal and family's best interest.  Just as the gas or pipeline company will always act in their best interest, so should the landowner.  

Landowners must be very careful not to allow landmen or other company representatives to use the landowner’s admirable character traits to their disadvantage during the negotiation process.  Over the past four plus years I have seen many landman and company representatives come and go.  Many landmen that I worked with in 2007 and 2008 are now working as brokers on behalf of different gas companies in Pennsylvania and other states.  I always enjoy the opportunity to question these landmen about how a few years ago they told me Company A was "the best" and "committed to the landowner," and now apparently Company B is suddenly "the best company they have ever worked for" and they are shocked how Company B is "dedicated to landowner fairness and protecting the environment."

The transient nature of the landman position is a clear indication that their ultimate job is to "get signatures" and move on to the next landowner or project.  I have developed many positive relationships with landmen over the years and many are truly nice people.  However, they have a job to do in working for the gas company to support themselves and their families.  At the same time you have the job to protect your land that is often the most valuable and fundamental asset of the family.  

Landowners must understand that the Oil and Gas Lease negotiation process may be a once in a lifetime opportunity and we must make the absolute most of this opportunity to maximize financial gain and continue to preserve your family's precious land.  Negotiations should always be respectful and almost always negotiations are a friendly and courteous process.  However, the landowner cannot allow kindness, loyalty and trust to result in an inferior Oil and Gas Lease, Pipeline Right-of-Way Agreement, or any other Marcellus Shale contract.  Always remember that the gas companies and pipeline companies are loyal to shareholders and profits and you must do what is best for you, your family, and your land.
 
Douglas A. Clark, Esq. – Protecting Pennsylvania Landowners