Who knew that sitting on top of the Barnett Shale could be so complicated?

Virginia Hammerle

When strangers offer to pay you cash — thousands of dollars — just for signing a one-page agreement allowing them to tap into gas reserves you didn’t know even existed, life can’t get much better than that. Or can it?

Several North Texas landowners are finding out the hard way that life could have gotten much better. That hasty deal can lead to depreciation of land value, loss of profits, noise pollution and just plain misery.

There are eight basic gas drilling issues:

* Bonus payments

* Royalty payments

* Drill site location

* Surface usage

* Transportation costs

* Post-production expenses

* Pooling

* Mortgage, insurance and property taxes

In looking at these issues, there are certain truisms you must adopt. The person who offered you the payment is not a reliable source of information. He is not going to be the operator of the well, will only get paid if you sign the lease and uses sales tactics that would make a car salesman blush. Trust no one from the other side.

The lease, even if it is only one page, contains vital, complex terms. It is a binding agreement. Its terms are as important as the price. The smaller the print is, the more crucial the information. There is a reason the leasing agent doesn’t want you to read or understand it.

A drill site is typically 2 acres to 4 acres in size. Twenty or more wells can flow from one drill site. It takes about 60 days to bring a well to production, and wells can produce for 20 years.

During “flowback” on a drill site, usually about 20 days, more than a million barrels of water can be used. That means a water truck will haul water to the site every 15 minutes, day and night.

So, when you consider at least 60 days of full-fledged activity, with large trucks rumbling through the property and at least 2 acres permanently devoted to the well site, you can see that having production on your property can be disruptive. A lot of cities and towns have adopted ordinances that impose some restrictions. But your main protection is to include restrictions in the lease agreement itself.

Landowners who band together have better luck negotiating favorable terms.

What’s negotiable on the eight basic drilling issues? Everything.

You don’t, for example, want the drill site to be next to your house. You want to limit the noise level.

The drill company has to have access to the drill site — you want them to construct the road, and you want to reserve the right to decide where that road will be.

The bonus payments vary widely. In the beginning, some poor souls received $500 and counted themselves lucky. Others held out and got $10,000 to $20,000 an acre.

The royalty amount is your percentage of the gross sales of oil produced. From that come severance taxes, ad valorem (property) taxes and federal income taxes. Several factors go into the estimate — but go back to the first truism before you rely on the estimates given by the “Landman.”

If you have decided to negotiate with a group of landowners, don’t forget to get some neighborhood improvements thrown in. Some groups have received as much as $75,000 for playgrounds, community centers or schools.

An experienced attorney can help guide you through the maze.

VIRGINIA HAMMERLE, a Denton County attorney, has been a columnist for area publications for more than 20 years. She is board certified in civil trial law by the Texas Board of Legal Specialization. For additional information, listen for Your Legal Minute on WRR-FM (101.1) or visit www.hammerle.com.