The operator knows who to pay; has all the necessary documentation, but has refused to pay the royalty owners for years.
What are the other options besides an attorney sending a form letter demanding payment?
He can forgo the demand letter and sue them. Other than that, you can wait for O.J. Simpson to get out of jail in Nevada. He and his friends can go to their office with guns out and demand the royalties due.
Not so. We are a country of laws and civil procedure. If Simpson would have realized that, he would still be free, even though he killed two people.
The short answer is that there is nothing they can do, other than take them to court.
Dave,
I do indeed appreciate your valued experience and I really liked your reply!
Here's another thought I'm sure that has crossed your mind many times. If it is the client's 100% owned land and minerals, what keeps the rightful land and mineral owner from having the sheriff there to keep the operator from wrongfully stealing the minerals that they have zero right to take since they are ignoring all of the contractual lease terms. When you think about it, the minerals are being stolen from the rightful owners. Right is right and wrong is wrong.
I may be looking at the similar situation. The operator is aware of my lack of means to fund a lawsuit so they do nothing. I already had a law firm sent them letter of demand and now I am waiting another week (total of three weeks) and I wonder what are my options. I could send a demand letters (sign myself) every week to tire them out, or I can file a law suit and represent myself (providing I would do necessary research). What if I file with a small court, only to obtain the court order to make them pay? Is it possible at all?
Dear Bob,
Most people are unaware that with the lease form offered by the Lessee, in 9999 times out of 10000, the payment of royalties is an obligation (promise to pay) of the lessee.
In more highly negotiated forms, the payment of royalty is a condition of lease, without which condition the lease would not be granted. The non-payment of royalty is now a breach of condition of lease which makes the lease fail (the operator loses the lease) and you get to re-lease it to them, or whoever you want, at whatever royalty rate you choose. You can also choose to produce the property your self -- pay 100% of the costs and receive 100% of the revenue.
This is a real good reason to have assistance when drafting and negotiating lease forms.
Best,
Buddy Cotten
I like everyone's reply and will include a clause, in my ongoing lease negotiations and I own 100% land and minerals, something to this effect .... The Lessee understands and agrees that the payment of royalties is an obligation of the lease and that any non-payment of royalties is a breach of condition of lease, and that Lessee's access to Lessor's land will be prohibited and considered a trespass violation.
Of course, if this should happen after lease is signed, then I would, first, change the locks and call the sheriff.
Thank you.
Pat
Dear Buddy, Dave, Pat and Susan,
I'm learning a LOT from you all. Let's be honest: Not all operators, even the big ones, are honest.
It would be nice if we could start some kind of a mass movement to protect the royalty owners.
It would be interesting to have next to the royalty owners signature: Non-payment of bonus within 90 days makes the lease null and void. Lease must be filed at the court house with a copy of the cancelled check with the minerals owner signature for lease to be valid.
They are all good replies. Before law enforcement will act, they will want to be sure that they are acting under due process of law. They will not act unilaterally, or pursuant to a phone call from a mineral owner. Something signed by a judge might get their attention.
The wells are drilled. What if you had a strong operator to top lease the prior operator and you guys would put terms in the new lease that would protect the royalty owner from the new operator?
I have filed suit against Devon on similar issues and even though one might want to do as so many have suggested here about all one can do is file suit and let the long legal process take it's course. In my case I wanted to keep them from taking the oil and gas by filing an injunction for trespass, the only problem with that is that if they are not found guilty of trespass (they win) you can be held responsible for their cost and lost revenue which could be substantial.
Running it thru the courts can take years and they can delay forever.
I have a neighbor who a certain large operator in the Barnett shale refuses to pay. I have sent them a certified letter, including the actual lease, the pooling certificate (which shows her interest in the lease) and the RRC lease/well info page showing it is producing. They typically do not respond at all. When we have called them, they have told my neighbor that she is not included in the well (lease) we are referencing. It is not worth the money to hire a lawyer, but I guess small claims court is a possibility. The biggest obstacle we have in pursuing this at all is a language barrier - my neighbor is not fluent in English. I still believe that is partially why the operator has refused to do anything about our inquiries.
Kitchen said:
I have a neighbor who a certain large operator in the Barnett shale refuses to pay. I have sent them a certified letter, including the actual lease, the pooling certificate (which shows her interest in the lease) and the RRC lease/well info page showing it is producing. They typically do not respond at all. When we have called them, they have told my neighbor that she is not included in the well (lease) we are referencing. It is not worth the money to hire a lawyer, but I guess small claims court is a possibility. The biggest obstacle we have in pursuing this at all is a language barrier - my neighbor is not fluent in English. I still believe that is partially why the operator has refused to do anything about our inquiries.
Its a Wild West here in Texas. Hard to believe.
Susan Roth said:
Kitchen said:I have a neighbor who a certain large operator in the Barnett shale refuses to pay. I have sent them a certified letter, including the actual lease, the pooling certificate (which shows her interest in the lease) and the RRC lease/well info page showing it is producing. They typically do not respond at all. When we have called them, they have told my neighbor that she is not included in the well (lease) we are referencing. It is not worth the money to hire a lawyer, but I guess small claims court is a possibility. The biggest obstacle we have in pursuing this at all is a language barrier - my neighbor is not fluent in English. I still believe that is partially why the operator has refused to do anything about our inquiries.
The sheriffs in Limestone and Robertson counties don't take kindly to thieving and trespassing. One time, one of my big rolls of hay was stolen from the field, and the sheriff assigned a detective to the case. Second time was when Luminant continued to trespass across my land to access neighboring tracts on the line, and making ruddy roads in my orchard. Yes, it was Luminant's easement, but my land, and the easement only gave them the right to enter/exit the easement from same gate. I finally called the Sheriff who showed my copy of original signed easement to attorney in town and I called contractor's management office and he apologized. No more trespassing, to date. Wild west? Not here ... just following the law.
It's not really the job of the local sheriff to interpret lease agreements. For example, if a mineral owner showed them a clause in a lease and demanded that the rig be removed pursuant to a particular clause (referencing your above trespassing clause for non-payment of royalties), it is very unlikely that would ever happen. Due process of law would require more than that, such as a hearing before a neutral magistrate, before any type of injunction would be granted. If a sheriff did assume that kind of authority, he would be walking on shaky legal ground and overstepping his authority. The U.S. Constitution requires Due Process of Law before anyone can be deprived of property rights. It actually does sound like the wild west in Limestone and Robertson counties.
Sure, you could sue them in Small Claims Court for up to $10,000. But then you would have to get a Writ of some sort to enforce the judgment, and those are complicated.
Susan Roth said:
I may be looking at the similar situation. The operator is aware of my lack of means to fund a lawsuit so they do nothing. I already had a law firm sent them letter of demand and now I am waiting another week (total of three weeks) and I wonder what are my options. I could send a demand letters (sign myself) every week to tire them out, or I can file a law suit and represent myself (providing I would do necessary research). What if I file with a small court, only to obtain the court order to make them pay? Is it possible at all?
If by "pooling certificate" you mean the plat that the producer files with the RRC, then you should know that the producer CAN file revised plats. From the information you have presented here, it is theoretically possible that they did cut your neighbor's tract out of the production unit and have done nothing wrong.
Kitchen said:
I have a neighbor who a certain large operator in the Barnett shale refuses to pay. I have sent them a certified letter, including the actual lease, the pooling certificate (which shows her interest in the lease) and the RRC lease/well info page showing it is producing. They typically do not respond at all. When we have called them, they have told my neighbor that she is not included in the well (lease) we are referencing. It is not worth the money to hire a lawyer, but I guess small claims court is a possibility. The biggest obstacle we have in pursuing this at all is a language barrier - my neighbor is not fluent in English. I still believe that is partially why the operator has refused to do anything about our inquiries.
Pete, I have reviewed all of the plats on file, including the P-12. My friend is shown on all of the documents. These are 1/5 of an acre residential lots we are talking about. Neighbors on all sides of my friend are being paid for the well. Those neighbors are also set up for mineral property tax accounts.
Let me ask a dumb question. Your friend did sign a lease, right? He's not an unleased co-tenant?
Leased. In fact, they signed an original lease, and then it lapsed and they signed a 2nd lease with the same company. Both leases are filed.