We have found out that the current operator of the gas wells on our land lease ran out quite some time ago. We are new to mineral rights because we were from an area that this was not an issue. Anyway we own the mineral rights for our land and we found out that the man operating the well and collecting it no longer has a valid lease for our land and we also found out he has been less than honest. How do we get him out and how can we find someone to take over? Help.
Why do you think he is not operating under a current lease?
Because an attorney told us the lease was no longer valid because all the original signers on the lease are deceased and that a new lease should have been signed with each new owner and there have been two owners since the original 1980 lease. We were also told that leases expire every 5-10 years but there is no lease agreement between the current operator and us only the deceased operator and the deceased former owners who sold to someone prior to us.
You should probably look for a different atty. Operators would go broke paying lease bonuses and agreeing to different terms just because someone sold their minerals on a well that's already producing.
The operator is deceased that signed the original agreement and trust me I read the original agreement the only people going broke were the original owners there was only a $1 an acre per year lease. Plus they guy who currently leases does not pay that and he has been taking oil of without paying us royalties on it.
Oh and he does not run any of the other wells he just leaves them sit he will not pump them off.
Melissa,
I'm assuming this is in Oklahoma because of your profile.
I agree with Steve that you need a different Attorney. Either he does not understand Oklahoma oil and gas law fully or he failed to explain why he felt you were no longer held by the lease. In my opinion, the information you are quoting from him is not correct. However, I’m not an Attorney.
Judging by your posts, there is a lot about this you don't understand. You are also making accusations against the operator that may or may not be correct.
1) The death of operator or mineral owner does not terminate the lease. We are still held by a lease signed in the 20s that 3 in the mineral owner chain have died. I can sell my mineral rights and the subsequent owner is still held by the lease my great grandfather signed. We own Overriding Royalty Interests in a lease in the same manner we own mineral rights. The Lessor (Mineral Owner) is still held by the terms of that lease from the 40s, even though the ownership has passed through 2 different owners.
2) I doubt you are reading the $1 a year portion of the lease correctly. Google paid up lease vs delay rentals. I bet you are reading a delay rental clause.
3) A lease has a primary and a secondary term. Usually something like “so long as oil or gas are produced in paying quantities”
4) If there is no production on the wells for an extended period of time, then your lease “may” not be held by production and your lease is no longer valid. Situations differ, but you may be forced to take legal action to prove this. “Produced in paying quantities” is open to interpretation even there is some case law out there on it.
5) It is not that easy to take oil and not pay a royalty on it. I’m not saying it does not happen, but they have to sell it somewhere. Because of the taxes that have to be paid on it, the accounting systems would make it a bit difficult. I know there are some ways that it does happen, it is just not as easy as one might think.
Here is some reading material that might help. Even though it is based on Montana most of it is the same as Oklahoma.
http://msuextension.org/publications/OutdoorsEnvironmentandWildlife/MT201209HR.pdf
Melissa: My mother passed away 3 years ago leaving me mineral rights. I was a paralegal for many years and when I started to delve into all this, about a year ago, I thought I would have a pretty good handle on what's what. WRONG. I have been studying and learning everyday since. I have also run up against a few lawyers who do not fully understand the laws involved in oil and gas leases. My suggestion is to start studying. This forum is a great place to start and the people here have been extremely knowledgeable and helpful.
Good luck.
Another thing to check is - are you sure of how much mineral rights you actually have? If you bought the land 'subject to all minerals of record' in Oklahoma, there still may not have been anything there. I've seen land sell with those terms, and checked further to find out that the minerals were split off way before. The seller was just selling his interest in 'any that may not have been reserved previously'.