An interesting tidbit of inormation

As you all know by now my neighborhood is held by production from a 1955 lease and a well in a completely different section. I and some of my neighbors have spent the past 3 weeks discussing the need to move forward with a demand for release and possible litigation with all of the folks in the affected area. There has been much discussion re, the attorney fee, court costs, etc.

There have been many questions raised and, since more and more people out there are finding themselves in the same possition I thought I would share some questions and answers:

1. If you are HBP in an old lease but your section was never drilled how do you get out of it?
Answer: Under the Louisiana Mineral Code you must issue a demand for release. If the company does not release you in the specified time (30 days) then you file suit. There is case law from the Louisiana supreme court that has set a president in some cases of releasing people from leases if the old lease was assigned and divided in the assignment. You will need a good oil and gas attorney to review the research and determine if your case has a chance of succeeding.

2. If your land is HBP from an old lease and the well is in a different section that was also part of the old lease shouldn't you get royalties from the well that has you HBP?
Answer: No, the only way you get royalties is if you are in the producing unit. The rest of the land in the old lease is not entitled to royalties but is still HBP if there was not pugh clause.

3. If you previously signed a lease then found out there was an old lease out there how does that impact the lease you recently signed?
Answer: the lease you signed is not valid because the title was not clear if the property is HBP from another lease.

4. If you file a lawsuit to break the old lease does that prevent the O&G company from drilling in your section until the suit is completed?
Answer: no, if the O&G company has enough acreage leased under clear title a lawsuit will not necessarily prevent them from drilling. They may choose not to drill in an area impacted by a lawsuit but a lawsuit as the one we are discussing would not preclude them from doing so.

5. If you have a lease that is about to expire and a lawsuit is filed will it stop the clock on the lease?
Answer: No, the lawsuit will not stop the clock on an existing lease that is not subject to said lawsuit. If you are fighting an old lease such as the 1955 lease we are under and you signed a lease 3 years ago not knowing about the old lease then the only impact a lawsuit will have on the current lease is to legitimize it if you break the old lease. (confusing huh).

6. You are stuck in an old lease and your neighbors are moving forward with a lawsuit. What if you decide not to participate in the lawsuit and just wait until they break the old lease. Can't you then just reap the benefits of what they did without having to pay the attorney?
Answer: No, only the people in the lawsuit will be released from the old lease. You will then have to file your own lawsuit to get out of the old lease. In my oppinion, it is better to go with the group from a fiscal standpoint.)

I know this blog is not as flowery or interesting as my prior posts but I thought the information may be of benefit to some of the folks out there experiening the same problem.

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Comment by Skip Peel - Mineral Consultant on October 6, 2008 at 15:40
Good information is good information even if it's not flowery. Gee, flowery? I guess I need to go back and reread the past posts. Thanks, Kassi.


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