Non-Surface Use Lease

By Paul R. Yagelski
Rothman Gordon
Pittsburgh, Pennsylvania

The Devil is in the Details

You have been offered an oil and gas lease, and you are interested in leasing your oil and gas; however, you do not want any activity of any kind on your land. Can such a lease be negotiated? Yes. Such an oil and gas lease is usually referred to as a non-surface use lease, a non-surface operating oil and gas lease or a non-surface oil and gas lease (collectively "non-surface use lease"). What is a non-surface use lease?

A non-surface use lease is an oil and gas lease, which prohibits the oil and gas company from using the surface of your land to develop the oil and gas thereunder or under adjacent properties. You lease your oil and gas to the oil and gas company, but the oil and gas company cannot come onto the surface of your land to develop the oil and gas that is either under your property or under adjoining properties. In such a case, in dealing with an unconventional oil and gas lease a/k/a a Marcellus shale oil and gas lease, the oil and gas underneath your property will be produced by placing your property in a unit with the oil and gas wells located on one or more of the other properties in the unit. The horizontal laterals can, however, extend underneath the surface of your property in order to develop the oil and gas thereunder and under other adjacent/adjoining properties. If you want a non-surface use lease, and the oil and gas company is agreeable, you need to be careful as to the language. As they say, the devil is in the details, and not all non-surface use leases are in fact non-surface use leases. The lease may be entitled non-surface use lease but the language may indicate otherwise.