Any legal downside to Release of Lease?


#1

Oklahoma…I have a high percentage of net mineral interests in a lease which has had 4 producing wells, and one disposal well. The disposal well was damaged beyond financially feasible repair by circumstances beyond the control of the field operator. That operator is involved in litigation with another adjacent oil company to recover losses and damages operator #1 says operator #2 caused. That court case will likely continue for some years. Since no production has occurred for one year, by virtue of the operator unable to dispose of its wastewater, and the losses and litigation has effectively rendered the operator out of business, as a Royalty Owner I want to get the lease released in the hopes another oil operator being interested in leasing. However, before I proceed, I do want to know if having the lease released would put me into a position of legal liability…possibly for remaining damages, EPA concerns, etc. Thank you for any input on this out of ordinary situation.


#2

Ed: You should have an attorney review your situation. Do you have current lease offers?


#3

Unbeknownst to me at time of posting, the operator recorded some production a few days prior…very unusual since the operator had not produced for a full year. The ticket date for production was recorded 1 day AFTER the anniversary date of the damaging incident one year prior. That really makes me scratch my head. I’m now trying to re-contact the OCC for some insight.