landowner

Postmark 3 days late to exercise extension rights

So, I got a letter in the mail from Encana postmarked Aug. 18, 2010 with a check to exercise their two-year extension right on a five acre piece of property and a two-acred piece in Township 17 range 12 west, Sections 19 and 30. The check was dated Aug. 13 and the lease expired on Aug. 15. Going by the postmark, they missed the deadline. Three years ago we signed with $200 an acre bonus and 25% royalty with $50 an acre to extend.

In addition, I got a phone call asking about an easement 3 months ago and saying that they were planning to drill this fall in that area. Nothing since then, though.

Suggestions on what should be my next step?

Tags: 12, 12W, 17, 17N, 28, Encana, N, Petrohawk, Section, Township, More…W, expired, extension, field, lease, producing, range, rights, sligo, wells

Views: 188

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Replies to This Discussion


Oil & Gas ProPermalink Reply by Two Dogs, Pirate on August 21, 2010 at 10:34
Talk to an attorney and don't deposit the check or trow away the envelope.

landownerPermalink Reply by JD on August 21, 2010 at 10:40
Think Two Dogs is on to something. The date on the envelope may hold more weight than the date on the check.

Oil & Gas ProPermalink Reply by Two Dogs, Pirate on August 21, 2010 at 10:58
JD, most of the time the extension reads on or before the expiration date. I really can't see Encana making this sort of a mistake unless their lease covers this sort of thing. The money spent on a lawyer may be well worth the investment. Thomas will need to pick a decent attorney that will not rip him off. Thomas may need to post the exact wording of the extension clause here on this thread to get maybe some free advise from some of the residing attorneys here on GHS.

landownerPermalink Reply by JD on August 21, 2010 at 11:05
2D's, Aug. 18 appears to be 3 days after Aug. 15 expiration date. Anyone can backdate a check. If check was cut on 13th, someone will probably regret it wasn't mailed that day.

Oil & Gas ProPermalink Reply by Two Dogs, Pirate on August 21, 2010 at 11:20
If the check was cashed, I would think this discussion would be over. If someones accepts their money, IMO that would be taking their deal but I am not an attorney and Thomas needs an attorney.

landownerPermalink Reply by Thomas Teekell on August 21, 2010 at 13:34
I haven't cashed the check.
Permalink Reply by S.H.M. on August 22, 2010 at 5:42
Smart man, you are, Thomas.

Oil & Gas ProPermalink Reply by Skip Peel - Mineral Consultant on August 21, 2010 at 11:12
Thomas needs an experienced O&G attorney that has no professional conflict of interest concerning Encana. One who can determine any opportunity for competition from other operators with regard to the specific mineral tracts. As these are small acreage tracts, the right attorney will also know what the max terms that Encana has allowed within a reasonable proximity recently. Small tracts do not support demands for terms far out of the norm for a locale and an operator. This is a classic example of the type of circumstance where inexperienced attorneys make mistakes that ultimately cost mineral owners.

landownerPermalink Reply by Thomas Teekell on August 21, 2010 at 13:41
A family member gifted the property, including mineral rights to me last summer. They mailed a check to the previous owner earlier this summer (which would have been on time, if they still owned the property). They called me and gave me the check. I called Encana to tell them that I was the legal owner. They said to mail the check in with a copy of the legal documentation proving I was the owner. I did so over a month ago. The check was the next time I heard from them. It never really occurred to me that Encana would miss the deadline until the check arrived in the mail and I checked the lease agreement.

landownerPermalink Reply by Mac Davis on August 21, 2010 at 13:34
Check the lease to be sure it doesn't give them a grace period to renew.

Also be really sure the postmark date is really 18, not a blurry 13.

I wonder if it would be a good idea to call up Encana and tell them they missed the deadline and see what they say.

It's amazing that the company would let the date get anywhere close to the deadline anyway, but not surprising. Beancounters are stupid sometimes.

landownerPermalink Reply by intrepid on August 21, 2010 at 13:43
I really can't see what it would hurt to write back to Encana and return their check with a letter stating that it was postmarked and sent late (include a photocopy of the envelope) and did not meet the deadline in the lease for automatic extension. Then ask them if they would like to discuss tearms for a new lease.

In the meantime, find the lawyer.

Anyone see problems with that approach?

Oil & Gas ProPermalink Reply by Skip Peel - Mineral Consultant on August 21, 2010 at 14:36
No, don't. Let the O&G attorney handle it. Make no uniformed assumptions.

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