Replies to This Discussion

Permalink Reply by Skip Peel - Mineral Consultant on March 28, 2011 at 2:19

The answer is in the lease, not in any state regulations.  Since the lease is from the 1930's, it may not have a horizontal Pugh clause which states that after the primary term any portion of the leased lands not included in a producing unit would be released.  Lacking a horizontal Pugh clause, the lease is still in force as to all the lands leased unless there has been a gap in past production of sufficient length to terminate the lease.  That's the short answer.  Any gaps in production would have to be researched as to the particulars.  For example a drilling and production unit can have multiple wells and production from any one maintains the lease even if the one producing changes from time to time.  Also periods of non-production may be covered under a shut-in clause in the lease.  If you wish to determine the facts of the matter and what your options may be, I suggest that you consult an experienced Oil & Gas attorney.

Permalink Reply by Jim on March 28, 2011 at 15:59

I appreciate the insight. I will review the lease again since I do not remember anything similar to the horizontal pugh clause that appears in some of the more recent leases. I may end up with an O&G attorney; however, I am trying to get up to speed prior to reaching that point. This site has been a great help. I have researched and found that this may be the first lapse in production since the signing of this lease.

Permalink Reply by kittycatmama on March 29, 2011 at 2:25

Jim, we are tied into a similar lease in the Grand Cane area. Original lease done in 1960s with no pugh clause covered 4800 ac. There is one old shallow producing (barely producing) well on one area of the 4800 ac. It holds everything. We have been the route of attorneys with no luck.

Permalink Reply by Skip Peel - Mineral Consultant on March 29, 2011 at 2:33

Every case is unique.  And an experienced Oil & Gas attorney is required to determine if litigation would be warranted.

Permalink Reply by kittycatmama on March 30, 2011 at 23:46

Skip, after dealing with 3 different experienced oil and gas attorneys, I am not impressed. One did a mineral title and really screwed up,  2 more experienced ones looked at old leases and didn't even want to pursue litigation. All 3 charged for these opinions, but put their caveats in that "these were opinions" so they would not be held responsible for anything. Has there been any case where a landowner has been able to get out of an old hpp lease? Not that I have found.

Permalink Reply by Skip Peel - Mineral Consultant on March 31, 2011 at 2:01

Most cases prior to the Haynesville Play where production gaps were significant and there were no provision for or payment under a shut in clause resulted in the lessee simply recording a release when noticed by the lessor.  Obviously there was less at stake for both parties before the value of deep rights were known. 

How do you know the attorneys you consulted were actually experienced O&G attorneys?  Did you do any research?  Or did they just tell you that they were experienced in mineral law?  Mineral Deeds do not get screwed up by "experienced O&G attorneys" in my opinion.  As to the opinion of those not recommending pursuit of litigation, that does not necessarily prove experience one way or the other.  Every case is unique.  Experienced O&G attorneys pick their cases carefully as the results will define their careers and their financial success.  And many mineral owner plaintiffs do not make ideal clients.  A Haynesville related example would be those mineral owners held by old leases who wish to "demand development" of the shale.  Experienced O&G attorneys do not write demand letters for clients who are unwilling to follow through with a law suit.  If they got a reputation for sending demand letters and not following up with a suit, very soon no energy company would take their letters seriously. 

Litigation over mineral issues has always been a rather complicated and difficult area of legal practice which has now become more so by a factor of 10 owing to the size of the companies in this Play and their penchant for contesting each and every legal challenge.  The relatively small number of local lawyers and firms with extensive O&G experience have traditionally had client bases that were either O&G companies or owners of large private land holdings.  Unfortunately the first group was the larger and they now represent additional O&G companies and either continually run into conflicts of interest or simply choose to not risk the wrath of O&G clients by representing land/mineral owners.  I am personally aware of only a handful of attorneys who I consider sufficiently experienced and ethical to practice mineral law and who tend to do so for the mineral owner.

Permalink Reply by kittycatmama on March 31, 2011 at 3:09

Yes, I did my research. Note, title opinions are OPINIONs. When we were ready to lease for $20000 an ac. the O & G co. discovered an old lease that held over 4000 ac. We bought the property because of the mineral rights and had the  mineral title run. I also found out that E & O insurance did not cover our loss because it was an opinion. Two o&g attorneys were not interested in trying to get us out of the lease AFTER we paid them for their time.

I now run my own titles and have not had any problems with hbp. I take my time and I learned a lot from the mistakes made by legal professionals. I think they hurriedly do the titles or farm the work out (that is what I found out happened in my case).

Permalink Reply by Skip Peel - Mineral Consultant on March 31, 2011 at 3:20

I do not doubt your story.  I do doubt that the attorneys who farmed out the title work were experienced O&G attorneys.  Certainly not ones with sufficient ethics in my book.  I wasn't aware that you were a mineral investor, kcm.  I hope you will be able to avoid a repeat in the future.  Title work can be very complicated.

Permalink Reply by Henry on March 31, 2011 at 2:58

KCM,

Residents of Louisiana are at a tremendous disadvantage when it comes to litigating against large companies.  The state law does not allow for punitive damages.  So a company knows it can screw the little guy because, there is no real penalty for it, no matter how bad their actions.  Also, lawsuits cost a lot of money.  If you aren't going to recover hundreds of thousands of dollars, you would not risk the amount of money a lawsuit would cost.  Louisiana typically does not allow a plaintiff, even if successful, to recover legal fees.  The civil system in Louisiana is stacked against the little guy.

Permalink Reply by kittycatmama on March 31, 2011 at 4:19

I agree with that. That is why we never pursued any further litigation. One has to weigh the costs with the outcome. We would have been in the negative.We learned how to do our own titles because of that experience. I have found Desoto Parish's records very enlightening. Have learned a lot history by running some lengthy titles. Speaking of history, I read in Mansfield Newspaper that Desoto Parish is having its historical open house April 9 (schedule in current Mansfield Enterprise Paper). Lots of historical locations, homes, battleparks will be open to the public. Sounds like an interesting, educational experience