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Permalink Reply by herefordsnshale on July 10, 2008 at 10:00

I read this post earlier and was trying to find my notes from a mineral meeting I went to a couple of weeks ago. The attorney that spoke brought this up. You're right, a lease is made up of "covenants" and "conditions", but I can't find the notes and I'm having a mental block on which is which. So for the sake of discussion we'll say a breach of "condition" means termination of lease and breach of "covenant" means you have to sue for damages. He said you want to turn as many covenants into conditions as possible. You do this with the magic words: "or this lease shall terminate". He said add that phrase to the end of every stipulation in the lease. If I have them backwards someone can write back and yell at me.

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Permalink Reply by shelby on July 10, 2008 at 10:44

herefordsnshale,
thanks for the info and reply. this situation applies to my family in as much as many of the mineral interests held by lease, or pooled participation, date back many, many, years. in some cases years went by, and no mineral royalties were paid. in other cases very small amounts were paid to maintain production interests for the o&g companies working the unit under lease terms. the only out that I would see on very old leases to void them, were if they failed to perform a "conditional" term of a lease, whereby that lease could be terminated. alot to sort out on this end for sure. if the o&g companies have complied on their end of a pre-struck bargain, we have no right but to comply on ours as determined by the lease language; expriation time frames established by the state (if they so exist in law) or perhaps options to lease seperate formation depths; one of the experts on allexperts.com did reply to a question I posed, that there might exist the right to lease other formations if you were "pooled" into a production unit, and that unit was specifically identified by state permits describing specific formations, ie. james lime, in the permit/units original drilling target. i am sure that these depths are modified all the time by the state, but, it does not seem fair that that a o&g company can manuver to perform a "land grab" as others have referenced to extend their rights beyond the scope of the original lease/permit, and that a landowner/slash mineral rights owner should not have rights to limit such request modifications. I guess they do, regarding public hearing notices; do the small guys every win? some of the other comments by HS followers suggest the same type of thinking on this issue.i know this is not stating any specifc legal positions, or perhaps it is, but, i am just trying to better understand the many options that might be available to all of us to protect our rights, any shared comments always appreciated.
thanks,
shelby

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Permalink Reply by herefordsnshale on July 10, 2008 at 10:58

At that same mineral meeting the attorney also said that oil and gas companies in Central Texas were using old leases to get uranium because it fell under the lease guidelines. The companies worked in the dark of night so to speak for many years because people just didn't have a lot of knowledge about the business and just went along with the company's line. Knowing what I know now I can look back at my lease and see that I did not get the best deal I could have either. I have heard that too about how you can lease for different depths, definately worth looking into.

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Permalink Reply by Duster on July 10, 2008 at 10:59

My attorney told me that if a new lease is presented as a good value ($200) and the company KNOWS that it is worth much more ($16,000) when signed the lease can be challaged because it was not represented fairly in value. (Something like that). There is even a name for it. This came as a shock to me.

I can not name who he is, but he knows his stuff.

Soooo,, maybe there is a option for people who leased too early.

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Permalink Reply by shelby on July 10, 2008 at 14:40

Newcomer and Duster,
That is just not right as I think everyone, but, the true capitalist purist would agree. But, from reading the posts, it figures that those people who leased at low upfront money, will hopefully someday benefit from present day royalty rates on drilling in the future. Ofcourse, this can't really be justified, as the old people, or getting old people, may never live long enough to receive the possible first royalty payment. On another note and on a similar theme, do you figure O&G companies feel guilty about land that they leased for $12.00 an acre twenty years ago, hold by production now "to the center of the earth" and flip deep rights in that lease hold acreage at present values to bigger players. Probably no different than how they feel for what they leased for $200-$5,000 last year. The oil companies know that the present value is much greater than the original $12.00 paid upfront 20 years ago, or, the $5,000 paid last year, but, I don't see them looking to renegotiate all of these under valued bonus money leases at their expense to convey a sense of fair business pracitice. Nothing has changed the game it's still "big business". Should lessor/mineral owners receive current compensation values & terms for different newly defined production zones? The original lessor will certainly lose out on the up-front money for the same lease that now might be worth17K per. acre, but they will still be getting royalty payments, even though terms back then were not nearly as generous; fair? I don't know, but, it sounds like the only ones that might be able to stop this type of manipulation of resources and money, at the unfair expense of the people would be State and Fed goverment. Where do they stand on these issues, the peoples representatives? How can companies petition the State to do things like reclassify depths of known formations, and not have to pay for rights to that different but "same" zone, and pay 1/32 instead of 25% royalty to affected lease holders (a proposed example)? You can't blame them for trying, but, maybe our regulatory agencies should'nt let them do it; you think?
Shelby

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Permalink Reply by Bobi Carr ("parker") on July 10, 2008 at 15:09

Is the term Leasion or leasion beyond moiety? (not sure on the spelling).
In Louisiana if you BUY a piece of property for less than half of the value of the property, the sale can be recinded within the first year.
Could he have been speaking about an outright sale instead of a lease.
If it pertains to minerals - I would LOVE to find out who he is.

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Permalink Reply by shelby on July 10, 2008 at 15:42

parker,
sounds like french terms to me.
i believe in most areas regarding real estate, there is no minimum fair amount when buying property. I think you could trade (buy) a million dollar condo for a can of beans and a "quit claim" deed. I thought you could do that in LA too.
shelby

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Permalink Reply by Bobi Carr ("parker") on July 10, 2008 at 16:30

You can do it on a Quit Claim Deed because you are only selling "whatever" your interest may be.
And yes it is a french term. I will try to look up the spelling.

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Permalink Reply by Bobi Carr ("parker") on July 10, 2008 at 16:45

OK, its been quite a few years since I learned the term and no common applications for it. I was also off on the spelling.

Lesion Beyond Moiety is a civil law term used to describe the ability of a seller of immovable property to rescind that sale if the price paid for the property is less than (usually half of) the actual value of the property at the time of the sale.

Louisiana Civil Code Article 2589 is entitled "Rescission for lesion beyond moiety" and states that the seller may rescind the sale of an immovable when the price is less than one half of the fair market value. Under this law, a seller may invoke this right even if he has renounced it.

The concept is known as laesio enormis in some other civil law countries, where it is not necessarily restricted to sales of immovable property. For example, under § 934 of the Austrian Civil Code, the party to a contract may rescind it if it receives less than half of the fair value of the consideration. The other party may avert rescission by agreeing to pay the difference to full value. The laesio enormis has been criticized from a law and economics perspective for its inefficient incentives. In many cases it is impossible to profit from gathering information because profits above the mentioned threshold are prohibited by the law.

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Permalink Reply by BirdDawg, plain ole' idiot on July 10, 2008 at 17:43

I think you will find that "lesion beyond moiety" does not apply to mineral sales or mineral leases. Only immovable property.

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Permalink Reply by Bobi Carr ("parker") on July 10, 2008 at 17:48

Just curious, do you know if it has been test by case law?
If not isn't case law re-writen everyday?

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Permalink Reply by Scott on July 10, 2008 at 17:22

You might have a tough time proving that in court!!! Just my opinion though...

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