According to the American Petroleum Institute, oil and gas revenue hit an all-time high in Oklahoma in 2022. Much of that revenue for Oklahoma residents came from oil and gas royalties.
Unfortunately, with so much money changing hands, it is no surprise that oil and gas royalty disputes happen from time to time. If you own mineral rights, it is important to understand how to navigate these disputes effectively.
Understand your lease agreement
Your lease agreement serves as the foundation for any royalty dispute. It is paramount that you take the time to carefully review your lease agreement and understand its terms. Pay particular attention to details regarding royalty calculations and any post-production clauses which will dictate what may or may not be deducted from your royalty payments. Understanding your lease agreement can clarify your rights and obligations, which is important for resolving any dispute.
Gather relevant documentation
When a dispute arises, begin by gathering all the relevant documentation. This includes your lease agreement, royalty checks and any relevant correspondence. You can also obtain production records and other related documents from the Oklahoma Corporation Commission which may be helpful. Keeping these documents organized and readily available can streamline the process of resolving the dispute.
Find an experienced attorney
Reach out to an experienced attorney with the relevant documentation which you have gathered. The attorney should be able to review your lease agreement and royalty checks to determine whether your royalties are being properly paid. In the event that the oil and gas company has deviated from the terms of the lease agreement, ask your attorney to send a formal letter detailing your concerns, including evidence from your gathered documentation. Often times, this direct communication can lead to a resolution without needing further action.
If a direct resolution is not possible, you might consider mediation with your attorney. This process involves a neutral third party who helps facilitate a resolution between you and the oil or gas company. Mediation can lead to a mutually agreeable resolution.
Handling oil and gas royalty disputes can be a complex process. By understanding and following these steps, you can navigate these disputes effectively and protect your valuable mineral rights.