Joining a lease negotiation group to gain collective strength can have positive results under some circumstances – but not always. But unilaterally and irrevocably assigning your release rights to a broker is almost never a good idea.

The documents that a currently active broker is asking folks to sign include the following startling provisions:

• The lessor/assignor gets paid nothing (and might well never get any added consideration) and irrevocably assigns all rights to amend, renew, extend or ratify the lease for ten years or more.
• The broker makes no promises or representations as to what it will do on behalf of the lessor; in fact, the lessor has to “hold harmless” the broker from any claims that the broker has done anything wrong. The broker could literally amend one lessor's lease to lower the lessor's royalty amount in order to get a higher royalty amount for another lessor in the group, and the disadvantaged lessor would be stuck.
• The lessor loses any opportunity in a lease amendment to obtain updated surface use protections that are often included in these lease amendments (increased set-backs, audit clauses, Pugh clauses).
• The broker can unilaterally assign the rights assigned by the lessor. Should the broker be working with a drilling company, the assignment to the broker could even allow the broker to assign these rights directly to the lessee/drilling company.

If any HBP lessor is approached with a request for any assignment of lease rights, or for any amendment of the lease, it is urgently important that the lessor get competent and experienced legal advice. Never sign any lease-related document without it.

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Alan D. Wenger is an attorney in Youngstown, Ohio. His practice areas include oil and gas law, public utilities law, labor and employment law, land use law, environmental law, construction law and school law.