Summary of the situation
1989 lease was given to a person to pull oil&gas out of a property. Reversion clauses were put in to require E&P activities. He put in some gas wells and started production and paying royalties. Very little oil activity so the consensus is the Oil rights have reverted back to land owners.
This lease has traded hands a couple of times. The family were passive land owners and really only knew was that someone else was sending checks. The family members originally involved in the lease have passed away. Over the last 3-4 years the lease payments were going down and one of the family members contact the current leaseholder to ask when the lease expired so we could get some more exploration work. Got a song and dance.
Recently found out the lease rights were sold to a larger E&P company. We have established that the Oil rights were not valid (they were still sold to them supposedly) but they also sold the gas rights to this company. It is a fairly large sum of money. There was some production still from the gas wells.
Issue;
The original lease stated gas from 3500 – 5000ft. All the gas that has been coming up has been from 3300ft. During any of these transactions would the incorrect depth have required some interaction with the owners of the property/mineral rights or does accepting the money imply acceptance to the depth discrepancy? Does the new company have the gas rights to the property because of previous acceptance of royalties?
This is the first time any real money was paid out. The new lease holder has asked for an addendum to the lease to help validate their claim. They now believe the oil rights are not theirs but are still in debates on the gas rights. Thoughts?
1989 lease was given to a person to pull oil&gas out of a property. Reversion clauses were put in to require E&P activities. He put in some gas wells and started production and paying royalties. Very little oil activity so the consensus is the Oil rights have reverted back to land owners.
This lease has traded hands a couple of times. The family were passive land owners and really only knew was that someone else was sending checks. The family members originally involved in the lease have passed away. Over the last 3-4 years the lease payments were going down and one of the family members contact the current leaseholder to ask when the lease expired so we could get some more exploration work. Got a song and dance.
Recently found out the lease rights were sold to a larger E&P company. We have established that the Oil rights were not valid (they were still sold to them supposedly) but they also sold the gas rights to this company. It is a fairly large sum of money. There was some production still from the gas wells.
Issue;
The original lease stated gas from 3500 – 5000ft. All the gas that has been coming up has been from 3300ft. During any of these transactions would the incorrect depth have required some interaction with the owners of the property/mineral rights or does accepting the money imply acceptance to the depth discrepancy? Does the new company have the gas rights to the property because of previous acceptance of royalties?
This is the first time any real money was paid out. The new lease holder has asked for an addendum to the lease to help validate their claim. They now believe the oil rights are not theirs but are still in debates on the gas rights. Thoughts?
