Oil Lease Bonus Payment Not Paid

I am a member of a family who has had oil/gas interest in Canadian county for many years. I have never been involved as an active member concerning the leasing process and know little about it. I am now in a situation where I need to acquire some basic knowledge before involving an O&G attorney.

Our family signed a 3 year Lease Agreement for a certain amount per acre for a known amount of acreage. Through some research the agreement seemed to be a fairly accepted and a standard agreement if there is in fact a standard agreement. The bonus/interest were negotiated to our satisfaction. The documents were recorded in Canadian County in August of 2016 with an ongoing promise of the payment which has never been issued. In the middle of January, Company A that we signed with, has now assigned their interest to another company, Company B. I understand this is a common practice and have no issues with this other than the lack of a bonus payment,of course. Is this a Welcome to the World of O&G Business as usual, a test in patience or time to Circle the Wagons. Any thoughts concerning this would be appreciated. Thank, RT

Mr. Tully,

If no consideration was paid, it is probably a case where the lease is invalid (it all depends on the specifics of your situation). Have you spoken with Company A or B and let them know that you were never paid for your lease? Did they render a "promise of payment" or bank draft? They should either tender the payment or file a release of your lease in the county to clear title to your minerals. If they won't, you can file an affidavit stating that no payment was tendered and that the lease is void. The title isn't totally clear until they release it, but this is the path you may have to take if they don't cooperate. I'm happy to help any way I can--feel free to friend me or email me ■■■■■■■■■■■■■■■■■■■■■■■■■■■. Good luck!

You need someone experienced in state law to look at the lease and any other documents. This is a reason to add a provision that the lease is not valid unless and until the bonus is paid and to also deliver with a cover letter specifying the bonus and how it is to be paid. Or if you have not dealt with the landman and lessee, to withhold the signed lease until you exchange for bonus payment. An attorney might have advised you to file notice in deed records before this assignment to create cloud on title to leasehold until you were paid. Have you notified purchaser with hope that seller has not yet been paid? Get an attorney to help you.

Ralph,

Don't beat yourself up. You are not the first member that gave a signed lease to a land agent without collecting the bonus first. Most folks submit bank drafts to their bank for collection. (a terrible practice in my opinion) and eventually get paid after the lessee shops or assigns the lease. Check with the other family members to be sure that a backdraft didn't get paid or isn't due yet under the terms of the bank draft. If the draft says 180 banking days, that is really close to 6 months given the lessee to make payment. Therein nothing in most bank drafts disallowing recording before the bonus is paid. (Another reason I won't allow bank drafts)

If the bank draft is in default, you may have to give a default notice under the lease to the original lessee. Be certain that they will play with you on that if you signed a "standard" lease and gave it to them for recording. If you retained a copy of the bank draft and it is in default. Then you are best advised to get a mineral attorney's help. If the draft isn't in default on it own terms, the attorney will know. Then you can just wait until it is.

If you gave a signed deed to a landman with a verbal understanding you would be paid by a certain date, your attorney will know how to void the lease but it may be costly.

For all members who read this, I will reiterate, NEVER GIVE A SIGNED LEASE TO ANYONE UNTIL THE MONEY IS IN YOUR POSSESSION.

Amen!