Ok people, Please understand that if you are ever going to let a company lease your minerals negotiate everything in an email if you don’t have an attorney and demand that the landman meets with you and gives you the check as you sign the lease. Do not settle for anything less. You would never buy a car from someone and let them send you the title later. Understand that you hold the key to their profits. CYA!!
GWT, The well is not drilled and a lien against vehicles or real estate would be a Involuntary lien second to all voluntary liens and I’m not sure a small claims court allows for it, because there is no oil and gas statutory law for non-leasehold related personal property liens and would be a matter for a civil court to decide. A Mechanics lien is different than a Oil and Gas Lien. The OK Oil and Gas Owner’s Lien Act of 2010 provides for a well production lien. However, the mineral owner will have the same priority to other lien holders in the production. It’s best to get your money in your bank account before the operator or landman has physical control of your lease.
Our family is negotiating a lease and we added this provision to the contract we are proposing.
Lessee shall have no free use of gas, oil and water produced from said land for any purpose. However, Lessee shall have the right to purchase from Lessor gas, oil and water to use for any purpose.
Potential Lessee wrote back: This provision is impossible for us to accommodate as it prohibits us from producing the well. Please let us know if you are willing to strike this provision. The previous language from the lease allows us to produce the well and get production to a purchaser in order for you to receive payment. They propose:
Lessee shall have the right to use, free of cost, gas, oil and water produced from said land for its operations thereon, except water from wells of Lessor.
Is the lessee’s claim accurate? We believe we should be paid for all of our gas and oil. Any help or explanation would be appreciated. Thanks
Thank you Martha for the information and quick reply. I am learning a great deal. Thanks again
Bob, You might be able to prevail in small claims, but how are you going to get Monticello’s account number so you can collect? I have filed in small claims and prevailed, but had to provide an account number for the court to order the garnishment of the account.
Helen, Here’s an Exhibit “A” No Deductions clause you may want to have your attorney review and add to your Exhibit “A”. It goes along with the water, gas and oil usage. Once again, the clause below is an example and not to be inserted into any lease.
**No Deduction: ** All oil, gas or other proceeds accruing to the Lessor under this lease or by state law shall be without deduction for the cost of producing, gathering, storing, separating, treating, dehydrating, compressing, processing, transporting, and marketing the oil, gas and other products produced hereunder to transform the product into marketable form; however, any such costs which result in enhancing the value of the marketable oil, gas and other products to receive a better price may be deducted from Lessor’s share of production so long as they are based on Lessee’s actual cost of such enhancements, and result in a net increase to Lessor’s proceeds.
Amen, M.D. Aleman. Most of my family members followed AEW’s orders to sign/mail ASAP. Those of us who tried to keep control by submitting a signed/notarized copy accompanied by a letter stating when we got the check, we’d send the original lease - but were told, “AEW no longer accepts Faxed or Emailed signed/notarized leases, you must mail them - this week.” If we had ALL AGREED to make “the trade” a check for the lease, we’d had control getting the lease deal and the money. As it turned out some got a check and some lease offers were withdrawn. It’s been a real screwy deal.
MD, You are right and Jodean’s situation sounds familiar. If the leasing company is questionable, give an attorney $200-$300 to hold your lease and turn it over directly to the leasing company, not the landman working for them, in return for a company check. Have the attorney overnight you the check and cash it immediately.
Q for Martha and Bob - I’m following your discussion about using small claims court. I understand Martha’s comment that Bob would need bank account number to collect. But, wouldn’t it be just as good to obtain a lien on a physical piece of property (e.g., a well, vehicles, real estate…)?
Matha, Understood. Good points. Thanks.
I have been pursued by a landman from Cochran representing Crown Energy for a top lease - $250/acre with a 3/18 royalty for 3 years. I asked for 1/4 royalty but they wouldn’t agree and said this is the best they can do. Moreover, he said they are ‘wrapping up leasing efforts for now’ by the end of the week. What are my options? Property is 17N-5E-5. Original lease signed two years ago.
Regarding bank account garnishments pursuant to a small claims judgment, you do not need to know the account number, just which bank(s) that they might have accounts with. When the bank receives a garnishment, it has the duty to search its records for any and all deposit accounts in the name of the defendant in the case. Be sure the suit is titled properly and filed against the correct entity so that your judgment is enforceable. If you are fortunate enough to receive some funds but not the full amount of the judgment, garnish again and again for the remaining amounts due until your are made whole.
I have been pursued by a landman from Cochran representing Crown Energy for a top lease - $250/acre with a 3/18 royalty for 3 years. I asked for 1/4 royalty but they wouldn’t agree and said this is the best they can do. Moreover, he said they are ‘wrapping up leasing efforts for now’ by the end of the week. What do you see my options are? Property is 17N-5E-5
Thanks for asking. I took out a provision that would give the Lessee the option to extend the terms of the lease for two years beyond the contract dates. However, there is a provision that if another company offers to top lease the land the Lessee can offer the same terms and acquire the top lease. However, no one else has approached me.
I’m a little shocked if you were awarded a judgement that the plaintiff would have to go get the money. One would think if a judgement was handed down if the defendant did not voluntarily comply afterwards there would be some sort of relief for disobeying the judgement.
Jay, Small claims is mostly do it yourself. That’s why it isn’t all that expensive. Here’s some info.
http://www.dca.ca.gov/publications/small_claims/basic_info.shtml#what
Thank you - this was very helpful.
Daniel, Good advise! I wasn’t so lucky and couldn’t find the bank where the business account was held, but found the bank through a business acquaintance who had been paid. If small claims doesn’t provide relief, some mineral owners may want to check out class action suits for recovery of unpaid royalty and/or lease bonus payments.
NG, Did your original lease contain an extension clause allowing for top leasing?
NG, Sorry I don’t know other companies in your area. The good news is that it’s shallow Miss Lime which doesn’t cost much to drill, so Crown will probably drill and produce even though price of oil is low. Also, the Miss Lime wells usually last a long time.