Replies to This Discussion

Permalink Reply by Skip Peel - Mineral Consultant on February 9, 2011 at 14:42

Dan, on what would you base an injunction?

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Permalink Reply by Dan Aaron on February 9, 2011 at 15:00

Just grasping for straws. Basically  years ago when we signed the present lease we asked if anything was going on and the landman said no that the company was just speculating. This was not unusual, every few years somebody would call and want to lease so we didn't think anything about it. Then 2 weeks later we found out what was going on. Actually it was gross misrepensation. An yes I should have checked it out, but this happened ever few years and just had no idea something of this magnitude was going on.

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Permalink Reply by Skip Peel - Mineral Consultant on February 9, 2011 at 15:20

Most standard lease forms provide for the right of the lessee to assign the lease to another party.  Unless assignment is expressly prohibited there would be no legal recourse.  Many companies do not tell landmen the specifics behind lease offers and land companies representing a client often don't know the specifics behind lease offers.

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Permalink Reply by JHH on February 9, 2011 at 15:38

Skip, i've heard of leases that require written permission from lessor before an assignment can be made. Have you heard that too?

 

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Permalink Reply by Skip Peel - Mineral Consultant on February 9, 2011 at 16:00

Rare.  What is more common are leases that require the lessee to notice the lessor when the lease is assigned.

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Permalink Reply by JHH on February 9, 2011 at 16:05

Thanks, very helpful.  I've also heard of "soft assignments".  Lessee assigns all or part of a lease without notification or permission from mineral owner if required... and just worry about the consequences later.  shutting down for the night.  thanks

 

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Permalink Reply by The_Baron on February 10, 2011 at 3:52

It is quite common for small independent operators to put together a prospect. They would do all the leasing, and then sell interests in the prospect. As part of the deal the leases would be assigned to the investors. For example, Say I buy into a CV prospect covering section 37 of 1N-1W. I buy a 5% share. The operator will assign me a 5% share in those leases. Many times, there will be no assignment recorded in the couthouse, but I will have a private agreement with the operator that I now own 5% of thoses leases. This is how the small operator fund their exploration on a prospect by prospect basis. I can buy into a well deal without having to buy into the operators company itself.

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Permalink Reply by Les Bamburg on February 9, 2011 at 17:34

Dan, there is no such thing as a "standard" 25% royalty.  Many people would be glad to be in your situation and there may be some in your section that would not want an injunction to stop progress.

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Permalink Reply by Dan Aaron on February 10, 2011 at 8:53

Thanks, I have just been waiting 3 years for my lease to expire. I guess i will be blessed to get a well. I understand they plan to drill 2 or 3 wells under my property.

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