Good Morning:
I'm new here and this is my first post. I am a fiction writer doing some research, and I have some very basic general questions. I have read the articles posted on this website and a lot of the posts, but my questions are very general. I know how these things work in Canada (and I worked in O&G for many years), but I'm not familiar with how this works in the US and/or how it may differ.
1. So, if a person owns the mineral rights, when a company wants to drill on your land, it negotiates with you a contract to pay you a certain amount (a royalty) on production, is that right? Are these contracts long-term? like for the life of the well or just for X amount of years?
2. And a separate agreement is negotiated to pay for a surface lease? Are these contracts long-term as well? Do you have a separate short or long term road use agreement or is that a one time payment if they want to build a road?
3. If the company is not paying the correct amount, for whatever reason, is there a statute of limitations on how far back you can collect the amount owed?
I'm specifically interested in how these things apply in Colorado and Wyoming, but I assume that the basic rules apply in every state--correct me if I'm wrong.
Thank you very much in advance for any and all replies.
c m white:
1. A lease between mineral owner and whoever (oil company/ broker, etc) is negotiated for a certain bonus/acre amount, a certain % royalty, a certain length (#/yrs), and other things such as pugh clauses, etc. The lease is good until the expiration date or if a well is drilled, it is held by production.
2. The surface agreement is between the surface owner and the answers will vary in almost all agreements. Road use, surface damages and pollution is usually covered in this agreement. Keep in mind, in most cases (I deal with), the surface owner is different than the mineral owner.
3. Don't really understand your question but if you are referring to the oil company not paying the correct amount to the mineral holder, this could be a matter of extensive research on your part in gathering evidence to prove your case. I've never encountered this problem although I've read about this occurring. You might have to hire professional assistence in this matter to prove your correct.
4. Don't know about Colorado and Wyoming but I would think that the basics that have been discussed would be the same in each State. There are things that differ depending on the State, one being the "dormancy law" where the mineral owner must claim their mineral rights every 20 years in the event no activity has occurrred regarding the minerals.
Hope these answers will help and maybe someone else can elaborate further on your questions.