Examples of Addendums 

An addendum is simply something added to a basic document.

In Gas leases it is usually a condition or restriction added to a lease usually as an attachment.

That same condition or restriction could be incorporated in the body of the lease and would therefore not be an addendum but for the purpose of putting together a list we will refer to them as addendums.

WE ARE NOT lawyers and are just trying to put together a list of examples of addendums we are aware of in one location. We are sure there are many more and if you have any that you think should be added please let me know.

1.       Specification of my liability after the gas company is gone from the property.

2.       Indemnity clause (Property owners should be held harmless from any claims resulting from drilling activity and should be named as an insured on the gas company’s policy)

3.       Pugh Clause option for land not included in production unit

4.       Vertical Pugh Clause for depth severance provisions

5.       Favored Nation clause (If neighbor gets a better bonus payment then I get what he gets)

6.       Spud fee (Surface Damages) (compensation for well pads on my property) (Typically $10,000-$25,000)

7.       Right of first refusal. ( As primary term expires and I get a better offer from another company the company I am currently leased with can match it and keep the lease or I can sign with the new company)

8.       Negotiation of timber and/or crop losses.

9.       Property owner will be consulted about where the wells are drilled and pipelines are run on their property.

10.   Specify set back (Minimum distance from buildings, ponds, streams, and wetlands from a gas well )

11.   No surface disturbance clause (no surface access to my property except possibly seismic testing)

12.   Pipelines negotiated separate from lease. Higher per foot if no well or royalties.     (Except pipelines from a well on your property going to a main line are included in your lease, no extra payment)

13.   All pipelines below plow depth using the “double ditch” method (top soil separate and placed back on top)

14.   No water from my property (streams, ponds, wells, etc.)

15.   Lease is for Gas and oil rights only, NOT other minerals, Cell towers etc.

16.   Gas Company pays for testing by a certified lab of wells, streams, and ponds before during and after drilling. Well water sampling requirements to ensure that well water quality and quantity is not affected. Gas Company is responsible to remediate any problems identified. (Standard testing is 1000 feet from a well site)

17.   Gas Company will provide the property owner a copy of the drill site MSDS sheet if requested.

18.   Payment in lieu of free gas (Typically $2,000)

19.   Shut in clause (limit length of time and set reasonable fee for wells that have been drilled but are not producing)

20.   Negotiation of access road location

21.   Bond to cover any expenses after gas runs out or (well plugging insurance) an insurance company writes a single-premium policy insuring that a well will be plugged when it is no longer capable of producing.

22.   No Gas storage (Underground)

23.   Title Warranty clause ( They can’t hold back sign on bonus payment while they do a title search)

24.   Assignment clause - No assignment by Lessee will release the lessee of any liability, before or after the assignment, and that the assignee is jointly and severally liable with lessee for all lease obligations. Lessee is required to notify the property owner if lease is flipped.

25.   Royalty calculations on gross not net gas produced

26.   Gated roads

27.   Land restoration the lease should require specifics concerning reforestation, food plots for game animals or filling to the land’s predrilling slope.

28.   Right to audit a well’s production to show that royalty payments are accurate

29.   Requiring arbitration to settle disputes that pop up during a lease term.

30.   Require the company to compensate property owners for the tax penalty related to clean and green, CREP, etc.

31.   Property owner only pays taxes on the % of gas for which they are paid a royalty, not 100% of the gas taken from their property.

32.   Before Expenses royalty payment.

33.   Ad Valorem Clause
According to value. It is a property tax imposed by various states on property, including recoverable reserves and well equipment. It is calculated as a percentage of value of the property. in the event there is a change in Pa tax code that provides for an increase in ad value taxes attributable to, or resulting from, the assessment of oil and gas due to oil and gas production from the leased premises, Lesser and Lessee agree to abide by the law and pay their proportional share accordingly".

34.   When wells are closed, the lease will surrender and release leased lands and return the mineral rights to the property owner’s deeds within a specified time.

35.   Limitation on the size of the production unit or pool that your land might be put into.

36.   Force Majure time that a gas company is given beyond lease time restrictions due to circumstances beyond their control such as material availability, government regulations, acts of nature etc.

37.   Time limit for a shut in state or hold on property by the sole provision of Force Majure.

38.   Requirement for the property owner to be informed of fresh water formations encountered or other things of importance.

39.   How the acreage of your property will be determined.

40.   Identify when the lease can be terminated for nonpayment.

41.   This lease does not give the lessee the rights to any non gas related activity such as hiking, hunting, fishing, or camping

42.   All drilling residue and materials including pond liners will be removed when drilling is completed.

43.   DEP regulations: Lessee's operations on said land shall be in accordance with regulations set forth by the Pennsylvania Department of Environmental Protection. And any other applicable state and federal regulations.

44.   No injection or disposal wells.

45.   Bonus payment by cashier’s or certified check. (NO BANK DRAFTS)

46.   Employees and agents of lessee may be excluded from the property if they violate restrictions on surface use.

47.   Define "Operations."Clearly define what is necessary to constitute drilling operations, and when drilling operations are completed. Instead of letting the lease read "conducting operation", require the company to have a well capable of producing natural gas before the end of the primary term of the lease.

Define what "operations" will maintain the lease in effect beyond the primary term absent actual production.

48. Fully develop any production units within 3 years of the start of the first well in that unit or pay an annual fee of $500/acre/year (adjusted up for inflation) for all acreage  included in that production unit which has not been developed.

           49. If any property is held by a production but NOT included in a production unit, after one year the lessee will pay the leaser a minimum annual fee of $XXX/acre/year (adjusted up for inflation).