Question: Lease Assignment/Failure To Pay Royalties
1. Lessor signs lease with Lessee A.
2. The lease contains a consent-to-assign clause and a requirement that if Lessor consents to assignment, Lessee A shall remain responsible for all lease obligations.
3. Lessee A assigns the lease to Assignee A (Sublessee A), the assignment making no mention of Lessee A being relieved of its responsibilities under the lease.
4. Assignee A drills and successfully produces a gas well in the Lessor’s unit but subsequently makes no production payments to Lessor whatsoever.
5. Lessor desires to make a judicial demand for payment of royalties in accordance with:
RS 31:137. Nonpayment of royalties; notice prerequisite to judicial demand. If a mineral lessor seeks relief for the failure of his lessee to make timely or proper payment of royalties, he must give his lessee written notice of such failure as a prerequisite to a judicial demand for damages or dissolution of the lease. Acts 1974, No. 50, §137, eff. Jan. 1, 1975.
6. QUESTION: In light of the assignment to Assignee A, and the fact that Lessee A is contractually responsible to Lessor for lease obligations, to whom does Lessor give written notice of failure to pay royalties…to Lessee A or Assignee A, or to both? Reasoning?
Views: 1473
Replies to This Discussion
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Permalink Reply by JHH on -
No. The lease ran out without a rig/production and we got the release... minerals returned. Will lease it again some day... maybe.
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Permalink Reply by benny on
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Well that worked out real well for you didn't it ??
Ha ha ha, talk about biting your nose to spite your face. Next time (if there is a next time) just let the company assign the lease. Don't be so darn greedy.
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Permalink Reply by Andrew on -
I don't know if I would exactly call JHH's situation cutting of the nose to spite the face. I'd reserve that expression for giving your property away for less than it's worth.
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Permalink Reply by JHH on
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That's right. we "gave it away" when first leased before the big boom in 2008. the company never drilled... and we got nothing for three years. Thankfully we had a good lease with protections and got the minerals back. we learn more and more every year.
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Permalink Reply by Melissa Hausam on
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I think you did the right thing. I'm trying to figure out the same situation.
Did you need a lawyer to get the write the withdrawal contract with the lessee company?
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