Requesting advice over a scenario whereby the operator of my lease had its disposal well damaged beyond repair, thus shutting down production of four producing wells. The operator initiated litigation against another oil operator for losses and damages, and that litigation may go on for years. The event which caused the damage occurred exactly one year ago, and I’m told by a “state employee” an operator must release the lease if no production happens within one year of the filing of the report with the OCC. I’d like to contact other oil companies to see if they might have an interest in assuming the lease and taking over production. Therefore, I need to have the operator of the lease release the lease. But it’s tricky in that the operator is in litigation for loss in production, damages, etc. I need to find out if an existing litigation which refers to the lease somehow encumbers the release of that lease. In fact, the lease is so old I no longer have an original copy of the lease. Nevertheless, the one year rule should apply despite any litigation (I would think). Advice of the experts is much appreciated.
The tricky part (of many) is that your lease may have a force majeure clause in it. They may try to use that to extend the lease. The other part of your lease may have a 90 day clock on the shut in payments on it. If they pay you the shut in payment (usually $1/ac per year), they can hold your lease indefinitely unless you had a solid time frame limit on it. I would wait the 90 days (since you don’t want to tip them off to remembering to pay the shut in payment) and then ask for a release of lease. Here is the Oklahoma form.
Release of lease oklahoma686.pdf (7.1 KB)
If your county is part of the www.okcountyrecords.com counties, you may find the lease copy there. They only have digital files back to the early 90’s.
An attorney would have to speak to the legal ramifications of the litigation complications.
Thank you kindly for your response and clarification. I have a feeling an attorney may end up being my only avenue, but my funds are limited. Some months ago I actually spoke with the President of the small oil company who has run the lease since the 80’s, and he stated to me his company was effectively out of business because of the losses suffered. So I can’t see why they wouldn’t release the lease. But a question occurred to me: if an operator had a lease signed in the 80’s, was it state law then to record the lease with the County Recorder (Kay County)? I ask because I had a landman go to the Recorder’s office to track it down, and he couldn’t find it. I need a copy of that lease and it kind of stops me in my tracks, and not sure what my next step is.
Yes, they are supposed to record the lease. But if the lease is for minerals in a county other than Kay, it would likely be in that county courthouse.
Thank you again. Having been unable to find an example of a filled-out form of the Oklahoma Release you attached, may I ask the following, just to be sure…at the end of paragraph 1, after…"…to wit:" …is that field simply the Lessor’s (or heir’s) name and address? The “described land” field is self-explanatory.
Danke sehr! Looks like if the doc is supposed to have the Book, page, and recording date, I’ll need to find a landman. The last landman I hired couldn’t find the lease. I appreciate your help!