Using an Oil and Gas Lawyer to Help You With Your Lease
If you own land that is rich in oil or gas, leasing it out to an explorer or driller can be a complex matter if you are to ensure that the terms are fair, and they are complied with. This article looks at the different ways in which a lawyer may be able to help you in these areas.
If you own land that is rich in oil or gas deposits, you’ve probably leased your land to a driller to extract these resources and pay you a royalty for doing so. Can you be sure of how long the lease is valid, however? Curiously enough, it isn’t always easy to determine if a lease has expired. In fact, many landowners tend to be surprised to learn that under most oil and gas leases, it doesn’t automatically terminate a lease when the lessee fails to pay royalties.
If you have a currently valid contract, but find that the lessee has ceased production, you may be interested in terminating your oil and gas lease. An attorney with specialization in oil and gas litigation could be a great ally.
How can an oil and gas attorney help you?
An attorney can help you determine what you are owed on your lease, and whether it continues to be active. Leases can include language that leads to their automatic termination if royalties aren’t transferred within a certain number of days after production occurs. Drillers and exploration companies, however, tend to be wary of including such terms and their leases, because it forces them to make payments.
If you’re curious about the ways in which an oil and gas attorney may help you, what follows are examples.
- Through the initial contract phase, your lawyer may be able to persuade the other party, the drillers, to add on clauses that help you exit the lease when royalties remain unpaid. For example, a clause may be inserted before the primary term ends, to allow for the lease to be extended only if the driller pays the landowner a bonus.
- Your lawyer should be able to go over your contract and determine for you if it is still in force, whether it’s expired, or if it’s moved on to a secondary term.
- The lease you grant a driller doesn’t need to automatically end once the primary term concludes. If there is automatic extension language in the contract, your lawyer may be able to warn you about it and advise changes.
- When an oil or gas well is in shut-in state because of a lack of market, because of inadequate availability of transportation, or because of natural disasters or strikes, your lease may still be automatically extended. An experienced lawyer should be able to review your lease and advise you on the exclusion of such language.
Protecting your interests with help from a lawyer
Landowners need to constantly be on the alert to make sure that explorers and drillers on their land do comply with their leases. Even if you do receive royalties, you need to be technically experienced to determine if your royalty situation is satisfactory. A lawyer should be able to do the following to ensure that your lessee is in compliance with the terms of the lease.
- A lawyer is able to show you how to study your check stubs to determine that production codes are accurate, and your royalties are correctly calculated.
- A lawyer is able to advise you on whether a royalty audit is necessary to help determine if you are paid for whatever is extracted from your land.
- If a spill or other occurrence has caused land spoilage, your lawyer should be able to determine if it has been reported and cleaned up, and if these occurrences affect your lease.
If you have leased out your land for oil and gas exploration, ensuring a fair lease, and ensuring compliance requires expertise. The advice of an experienced oil and gas lawyer could be invaluable.