Oil and Gas Lease Lawyer in Amarillo, Texas
Before You Sign a Lease, Make Sure Someone Is Reading It for You
An oil and gas lease offer from an energy company looks like a standard document. It is not. Every provision in that lease was drafted by attorneys working for the operator — and every provision reflects what is best for the operator, not for you. The royalty rate, the lease term, the depth clause, the pooling provisions, the post-production cost deductions, the surface use terms — all of it is negotiable, and all of it affects what you receive from the production on your land for the life of that lease. As an oil and gas lease lawyer in Amarillo, Texas, Kenneth Netardus at Stockard, Johnston, Brown, Netardus & Doyle has been reviewing, negotiating, and drafting oil and gas leases in the Panhandle since 1994. He knows what fair terms look like — and he knows what the operator is hoping you will not notice.
Why Every Oil and Gas Lease in the Texas Panhandle Needs an Attorney Review
Many landowners who receive a lease offer believe they have two choices: sign what the landman presents or walk away from the deal. That assumption is wrong, and it costs Panhandle landowners money every year. Oil and gas leases are negotiable contracts — not take-it-or-leave-it forms. The provisions in the initial offer are the operator’s opening position, not the final terms. Landmen expect negotiation. The question is whether the person on the other side of the negotiation knows what to ask for.
As an oil and gas lease lawyer in Amarillo, Texas who has spent nearly three decades drafting and reviewing these agreements — on both the operator and the landowner side — Kenneth Netardus knows what each provision means over the life of a lease, which provisions are most commonly used to minimize landowner returns, and which modifications are routinely accepted by operators when a landowner has knowledgeable representation. The difference between a standard industry lease and a well-negotiated lease can be measured in thousands of dollars per year over a lease term that may last decades.
Oil and Gas Lease Services for Panhandle Landowners
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Lease Offer Review & Analysis
We review the operator's proposed lease in full, explain every provision in plain language, identify terms that are below market or expose you to unnecessary risk, and recommend specific modifications. -
Lease Negotiation
We negotiate directly with the operator or their landman on your behalf, pursuing improved royalty rates, stronger surface use protections, favorable depth and formation clauses, and other modifications that protect your long-term interests. -
Counter-Offer Drafting
We prepare written counter-offers that reflect the terms a represented landowner should be receiving in the current Texas Panhandle market. -
Surface Use Agreement Negotiation
Separate from the mineral lease, surface use agreements govern how the operator may access and use your property during drilling and production. We negotiate terms that protect your agricultural operations, water resources, and property values. -
Lease Amendment Review
If you have an existing lease and the operator proposes amendments—such as extending the primary term, modifying the royalty calculation, or adding formations—we review those proposed changes before you sign. -
Pooling & Unitization Consent Review
Operators sometimes seek consent to pool your minerals with adjacent tracts. We evaluate whether pooling is in your best interest and explain the potential royalty allocation implications. -
Division Order Review
Before you receive royalty payments under a new lease, the operator will ask you to sign a division order. We review division orders to verify that the royalty decimal is correctly calculated and that no inappropriate terms have been included.
The Provisions That Matter Most in a Texas Panhandle Oil and Gas Lease
These are the provisions where Panhandle landowners most commonly leave money on the table or accept terms that disadvantage them for the life of the lease:
Royalty Rate
The royalty rate is the percentage of production value you receive from oil, gas, and other minerals produced from your land. Standard industry rates in the Panhandle range from 1/8 (12.5%) to 1/4 (25%) or higher depending on the formation, the market, and the negotiating position of the parties. Many initial offers come in at 1/8. Negotiating to 3/16 or 1/4 can represent a 25–100% increase in your royalty income over the life of the lease. This is the single most important number in the lease.
Primary Term
The primary term is the initial fixed period during which the operator has the right to hold your minerals without production — typically ranging from one to five years. A shorter primary term protects you from an operator who acquires your lease speculatively and then sits on it. Extensions of the primary term through shut-in payments or continuous drilling clauses should be carefully reviewed.
Post-Production Cost Deductions
Many Texas leases allow operators to deduct post-production costs — transportation, compression, processing, and marketing costs — from the royalty calculation before paying you. These deductions can significantly reduce your actual royalty check compared to the stated royalty rate. A ‘no deduction’ or ‘at the wellhead’ royalty clause protects you from these reductions. This is one of the most commonly overlooked and most financially significant provisions in the lease.
Depth and Formation Clause
The depth clause defines which formations are covered by the lease. If you lease ‘all formations’ when the operator is only interested in a specific formation, you may be locking up shallower or deeper formations that could be leased separately for additional bonus and royalty. A formation-specific or depth-limited lease preserves your ability to benefit from development of other formations.
Pooling and Unitization
The pooling clause determines whether the operator can combine your minerals with neighboring tracts into a production unit — and how your royalty allocation is calculated within that unit. Pooling can significantly affect your actual royalty payment. Limiting the size of permissible units and requiring your consent for pooling decisions protects your royalty income.
Shut-In Royalty
A shut-in royalty clause allows the operator to hold the lease beyond the primary term by paying a small flat fee per acre when a well is capable of producing but is shut in for market or operational reasons. Shut-in royalties are often very small and can allow an operator to hold your lease indefinitely without actual production. The clause should be carefully drafted with time limits and reasonable shut-in payment amounts.
Surface Use Provisions
Unless your lease specifically addresses surface use, the operator has broad common law rights to use the surface in any reasonable manner necessary for production. A well-negotiated surface use clause or separate surface use agreement can define the locations of roads, wellpads, and facilities; require restoration of disturbed areas; protect water sources; and establish compensation for surface damage.
Pugh Clause
A Pugh clause prevents the operator from holding your entire lease by production from a single unit located on a portion of your acreage. Without a Pugh clause, a single producing well can perpetuate the entire lease — including acres not within the producing unit — for as long as the well produces. A Pugh clause releases non-unitized acreage from the lease at the end of the primary term.
The Landman Has Done This Hundreds of Times — You May Be Doing It Once
The landman who presents your lease offer is a professional whose job is to acquire mineral leases on the best terms possible for the operator. They know the comparable leases in your area, the going royalty rates, the formation potential of your acreage, and the legal provisions that affect the operator’s costs. They are experienced negotiators in a transaction you may never have done before. Having an oil and gas lease lawyer in Amarillo, Texas review your lease before you respond does not mean you are being adversarial — it means you are entering the negotiation with the same level of knowledge as the person on the other side of the table.
An Oil and Gas Lease Lawyer in Amarillo Who Has Drafted Leases From Both Sides
The most valuable thing Kenneth Netardus brings to a lease review is not just knowledge of what landowners should ask for — it is knowledge of what operators actually accept, because he has been on the operator side of these negotiations. As a shareholder at Sprouse Shrader Smith for twelve years, Kenneth represented major oil companies and independent operators in Panhandle lease acquisitions, drafting the exact types of provisions that landowners are now asking him to review and challenge. When he identifies a provision that disadvantages a landowner, he knows from experience whether the operator is likely to accept a modification — and how to request it in a way that does not kill the deal.
As an oil and gas lease lawyer in Amarillo, Texas, Kenneth brings that knowledge to every lease review we conduct. He explains what each provision means in plain language, identifies the provisions most worth negotiating, and pursues modifications that improve the landowner’s position without unnecessarily complicating the transaction. The goal is always the same: make sure the landowner receives fair terms for the value of what they are providing.
Oil and Gas Lease Questions — Answered
Is an oil and gas lease really negotiable in Texas?
Yes. Oil and gas leases are negotiable contracts, and the initial offer from a landman is almost never the operator’s final position. Landmen expect negotiation, particularly from landowners who have legal representation. Common negotiating points include the royalty rate, the primary term, post-production cost deductions, surface use protections, pooling provisions, and the Pugh clause. Whether a specific modification is accepted depends on the operator, the market conditions, and the quality of the negotiation — but the starting assumption should always be that the initial offer is a starting point, not a final answer.
What is a fair royalty rate for a Texas Panhandle oil and gas lease?
Royalty rates in the Panhandle vary depending on the formation, the production potential of the acreage, and current market conditions. Standard rates range from 1/8 (12.5%) to 1/4 (25%) or higher for highly productive acreage. Initial offers frequently come in at the low end of this range. Whether a specific offer is fair requires knowledge of the comparable leases in your area and the formation potential of your specific acreage — which is part of what a lease review provides.
What are post-production costs and why do they matter?
Post-production costs are the expenses an operator incurs to transport, compress, process, and market oil and gas after it is produced from the well. Many Texas leases allow these costs to be deducted from the royalty calculation — which means your actual royalty check can be significantly less than what the stated royalty rate implies. A lease that provides for royalties free of post-production cost deductions — sometimes called a ‘market value at the wellhead’ royalty — protects you from these reductions. This is one of the provisions most worth negotiating in any Texas Panhandle lease.
What happens if I have already signed a lease I did not fully understand?
The lease is a binding contract. Modifying it requires the operator’s agreement — but operators do sometimes accept lease amendments when there is a good reason and the landowner has effective representation. More importantly, even if the lease itself cannot be changed, we can evaluate whether the operator is complying with the lease terms as written — particularly on royalty calculations, post-production cost deductions, and pooling. Many landowners who are being shorted on royalties under an existing lease have legal remedies even without modifying the lease.
Received a Lease Offer in the Texas Panhandle? Don't Sign Without a Review.
An oil and gas lease is a long-term contract that governs your relationship with an energy company for years or decades. The terms you accept today will determine what you receive for the life of that production. Contact Stockard, Johnston, Brown, Netardus & Doyle for a lease review with an experienced oil and gas lease lawyer in Amarillo, Texas — before you respond to any offer or sign anything.