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The Oklahoma Surface Damage Act – an overview

The Surface Damage Act establishes interactions and payment between surface and mineral owners for drilling operation damages.

The Oklahoma Surface Damage Act guides interactions and negotiations between land surface owners and the oil companies and others who have the mineral rights. In the state, and elsewhere throughout the U.S., the owners of land parcels do not always also have ownership of what may lay below the surface. Separate people or groups often own the mineral rights for land surfaces owned by others. In exploring for and collecting minerals, including oil and gas, damages often occur to the land surface.

Understanding the state’s Surface Damage Act may help surface and mineral owners protect their rights and interests.

What is the Surface Damage Act?

Oklahoma’s Surface Damage Act provides procedures and rules for interfacing between surface owners and mineral rights holders. The act lays the groundwork for good faith negotiations to compensate surface owners for the damages caused to their land by drilling operations. It also specifies how the court will determine damages if the two sides cannot successfully reach an agreement on their own.

Who does the Surface Damage Act apply to?

The Surface Damage Act applies to those exploring or drilling for gas or oil. It also applies to the surface owners. Property lessees do not have coverage under the act. Therefore, all negotiations under the act should occur between landlords and the drilling operators. Property tenants have no standing for participation in negotiations or to collect compensation.

The act does not apply to all damages caused by oil or gas operations. The Surface Damage Act covers damages caused by drilling operations and preparation for drilling. However, it does not typically apply to problems caused by exploration using seismic instruments. In some cases, drilling operators may still negotiate with surface owners to conduct such discovery when creating their damages agreements.

How are surface damages measured?

The damages the act specifies mineral owners should pay to surface owners is the difference between the property’s fair market value before and after the drilling operations. Often negotiations under the Surface Damage Act occur before drilling starts, which requires surface owners and drilling operators to carefully consider the plans. Some of the factors considered when determining damages under the act include the following:

  • The permanence of the damages
  • The value and quality of the land used for the drilling operations
  • Side effects resulting from the drilling that may affect the property use and enjoyment
  • The site or location of the drilling operations

Navigating the oil and gas industry’s rules and requirements often carries challenges. To help uphold their rights and interests, surface and mineral owners alike may consider seeking legal counsel.