Hope someone can give me some insight.
My Father had a 3 year lease executed on March 2 2010.
The lease had a three year primary term with a two year option. The option clearly states that the option "may" be executed by the Lessor by submitting payment on or before the expiration date. He has not yet seen a check and the date is about 3 weeks past now.
Since this date has passed I am somewhat leery to call the Lessor because the option amount was minuscule in comparison to what leases are going for today. I am afraid they will claim check was sent but apparently got lost in mail ect. It seems to me that they certainly would have picked up the option if they were aware of the date.
I have checked recorders office and the last entry was the original lease. Do they have a certain timeframe to record any extention? Can I be safe to call them to verify that they in fact did not pick up the option? Or am I just tipping them off to make claim of lost check which they can simply offer a replacement and all of a sudden file paperwork to back up.
Thanks in advance. Oh by the way there has not been activity on this parcel of land that would otherwise tie up lease.
Lynn B.
Yes, they have a certain timeframe to renew the lease, the expiration of the Primary term. However, they do not have to RECORD an extension in the public record, just have made payment. Some Lessees file extensions, I would say that most do not. I wouldn't even bother calling them UNLESS there is no other competition in the area willing to pick up a new lease from you.
I would contact them in writing certified mail and request a release of the lease and then file it of record.
Another example why the extension option is unwise, or at best, an encumbrance.
Thank you for your responses. Yes after doing this a few times now, the option is a pain and would not likely do it again at least as this one was written. We have done others but the payment for the option was 125% of the original lease which was at very good terms so it did not seem to be a bad deal. This one was for a small amount and was written prior to the explosion of activity here in NW ND. At the time the possibility of an extra $50 bucks per acre was pretty appealing. Especially when many acres up here were left open for years.
I have contacted the original Broker firm and asked some questions regarding their procedures on exercising the option. I did this without disclosing name or exact location.
At this point I will put out feelers for a new lease and then contact the Lessor in question and request a release if the new interest demands it. It is likely they will do that for me if they want to get the new lease.
Lynn -
You will have to check this, but sometimes leases provide for the extension payment to be made directly to your bank. If your Father's lease allows for that, you may want to check his account for any payments received.
If none was, then follow Dirk's advice and request a Release of Lease from the company.
Hope this helps -
Charles
Thanks Charles we have checked that and that is not the case. His original payment was via check and there is no provisions in lease for Direct Deposit.
Thank You.
Then in my opinion, it appears the lease has expired under it's own terms. You can request a release if you want to, but you don't really have to do anything. Just wait for someone to contact you about leasing it again.
Lynn, based on my similar experience in 2011, I would very strongly urge you to follow Dirk's advice - send a certified, receipt-requested letter now requesting the Release, then record it in that county clerk's office. It took over a year for them to get around to sending me the Release, in spite of my reminder phone calls every few months. Once it is recorded, then the next time you want to lease, you don't have to spend months getting the release. My experience is that some operators will accept that if no drilling has happened and the lease has expired, then it's OK to do a new lease--- but another major operator insisted on a Release, no matter how long ago the lease had expired. Sometimes the original leasing operator has gone out of business, been sold, has to search stored archives, etc. - so best to get your release ASAP.
Lynn,
I would send a certified letter tell them that the lease has expired and you would like a release filed at the Co clerk office. Keep a copy for your file. If it's Continental Resources, they will tell you that they don't file releases, that the next company can do that. I have in my leases that they have to file a release, but it looks like I'm going to have to take them to court to get them to do that. Lots of the oil companies are not renewing the extension. They leased to much land and can't drill it all.
Lynn, I would check the rest of the lease to see if there is a clause granting them an extension after the lease has expired to renew the lease. My dad's lease has a clause that grants them 60 days after the lease has expired to renew the lease. If you do have such a clause, then I would wait until after the extension has expired before following Virginia's and Dirk's advice.
JSS There is no such language. It clearly states payment must be made on or before the end of the primary term.
How can I found out where there has been drilling around Vernon, TX.
Go to this Web site for the Texas Railroad Commission:
http://gis2.rrc.state.tx.us/public/startit.htm
If you are patient enough, you can call the RRC in Austin and somebody will step you through the process of how to dig out the nuggets of information you want. It would take alot of typing to describe it all to you in writing.
Finis Eugene Curtis said:
How can I found out where there has been drilling around Vernon, TX.
Finis -
If you will send me your legal description, I can pull up a set of Leasing, Permitting and Production Reports around your area (depending upon what information is available through DrillingInfo).
5 miles, 10 miles, maybe even 25 miles in any direction.
Charles
Charles Emery Tooke III
Certified Professional Landman
Fort Worth, Texas
Finus,
I notice where you are a member of the Wilbarger County Group and I post drilling reports as they become available for Wilbarger County. All drilling locations for the past year or so are listed for Wilbarger County(Vernon Texas) on the County website.
Clint Liles
Paige:
I've had this problem with leases and pipeline right-of-ways in the past. This is why it is so important that the lease stipulates that a release must be sent directly to you or filed by a certain number of days past the final date or a certain number of days after receipt of a certified letter requesting the release. This is reinforced with a severe $$$ penalty if this hasn't been done by a certain date and will escalate or double each month until the release is final. It works!
If they don't want to accept the lease with these terms, then there is a problem up front and I don't believe you would want to fiddle with these guys in the first place.
Paige Johnston said:
Lynn, based on my similar experience in 2011, I would very strongly urge you to follow Dirk's advice - send a certified, receipt-requested letter now requesting the Release, then record it in that county clerk's office. It took over a year for them to get around to sending me the Release, in spite of my reminder phone calls every few months. Once it is recorded, then the next time you want to lease, you don't have to spend months getting the release. My experience is that some operators will accept that if no drilling has happened and the lease has expired, then it's OK to do a new lease--- but another major operator insisted on a Release, no matter how long ago the lease had expired. Sometimes the original leasing operator has gone out of business, been sold, has to search stored archives, etc. - so best to get your release ASAP.
Bigfoot,
In my lease I have a clause that they have to file a release within so many days. Have you every tried to get them to do it. Continental Resources doesn't care what is in your lease. You have to hire an attorney before they will do anything. My last letter stated they would be paying for my attorney and they still haven't done anything. They think they can get by with anything.
Only on one pipeline release and one intended 45 day lease commitment that had been filed in the court house; but, only after being bitten a couple of times previously. These guys have so much power in their corner, that they will ignore any covenant lease clause they actually want too. The only thing they understand is hard penalty language with a lot of dollars attached to it and they may still want to play the game; but, if taken to court, unless they file bankruptcy first, the dollars mount up fast when you double the already tough penalty every 10, 15 or 30 days. Basically a covenant written in the lease is so the attorneys on both sides can make money. A prudent person and even an oil company that doesn't intend to play games, shouldn't mind these clauses.
Virginia Pflum said:
Bigfoot,
In my lease I have a clause that they have to file a release within so many days. Have you every tried to get them to do it. Continental Resources doesn't care what is in your lease. You have to hire an attorney before they will do anything. My last letter stated they would be paying for my attorney and they still haven't done anything. They think they can get by with anything.
Big foot,
Today's oil companies don't care what is in your lease. I am not proud of this, but I am on my 3rd court case with oil companies and I don't believe that is the way things should be settled. I have spent thousand of dollars that are not recoverable trying to get my minerals cleared because of the mess they have made by sell, assigning wrong, etc. Also, if a person looks at the Co clerk office and realized how many pages will have to be added to your abstract in Oklahoma, it's several hundred dollars just for their loan, part release, more loans, assigning, etc. One of these days, people are going to thing twice about leasing to them, but there will always be those people that just don't know better. I have been talked to like I was a 2 year old from an oil company personal that may have had a D avg and lucky to get out of high school. Yet, they thought they could tell me, quote "There isn't a D__ thing you can do". We will see who wins that one.