Can I get out of lease for non payment of royalties
I need some help with this one. We are leased with one co. & another is operator. Operator did Division Order Sept. 2011 & had a mistake in our acreage. I contacted operator's attorney & showed him his mistake. HE admitted his error. That co. corrected this to co. we are leased with who was undergoing a conversion in their computer system. Long story short, analysts from both companies assured us our payments would get to us eventually & they did last Dec. for all back pay. Spring forward Sept. 2013, no check. Contacted co. we are leased with who has now been bought by lg. co. I have had ONE email from them saying they are working on the glitch. Legal question: Based on past litigation precedents, I think we can demand to be released from our lease. Anyone dealt with this?
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Replies to This Discussion
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Permalink Reply by Bobi Carr ("parker") on
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If you handled notice properly (demand letter - certified mail), I believe you are entitled to legal interest if you asked for it in the demand letter or if it is stated in your lease.
I would think this is the most you would get.
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Permalink Reply by Bobi Carr ("parker") on
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But as Jay said, Randy Davidson's office is a great place to find out.
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Permalink Reply by 1kw6x71km1v37 on
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It's difficult if the operator can proffer a legitimate sounding excuse.It's one way the law protects lessees while lessors are subject to abuse.
Read all about it in The LA Mineral Code, Title 31: http://www.legis.state.la.us/lss/lss.asp?folder=105
See articles 31-132 thru 31:149
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Permalink Reply by Henry on
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Your obvious problem will be that unless you have a lot of acreage, the amount of money involved will never cover legal costs. It takes something like $50k, just to get started in a lawsuit. So unless you are willing to put up that kind of money, you are out of luck.
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Permalink Reply by kittycatmama on
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Henry, so far I have been able to research Louisiana Mineral Codes & handle my own legal. I got a severance released when attorneys didn't and got 1/2 the minerals and my back pay on one piece of land we own.. It just takes a lot of research and a lot of time.
I got minerals for 2 of my friends (one got $90000 back pay) by researching & finding a glitch in a title from 50 yrs. ago. I would never spend $50k on any legal costs.
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Permalink Reply by kittycatmama on
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I just noticed I said I got a severance released. It was a SERVITUDE not severance. That is what happens when I am typing and have a migraine.
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That's why a lessor needs a lease clause that mandates the defendant pay all legal and court costs of the plaintiff if the latter wins a lawsuit against the former. Whether or not an attorney is interested in getting his fees on this basis is an excellent indicator of how good your claim is.
If your claim is small but significant, an experienced attorney may be interested as he or she probably won't have to research the law very much if any at all to get a crack at all the potential fees for a minimum of time and expense.
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Permalink Reply by tc on
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It isn't the research of the law that is expensive, it will be answering the hundreds of motions, depositions and settlement conferences that your attorney will be required to do as the operator attorneys, who are on salary, do their job of defending their company.
The OP could get back royalties without an attorney, but they won't break a lease, their original question, without a large legal bill.
Even if you did get out of the lease, if I was the operator, I would demand all back lease bonuses and royalties, as if the lease never existed. Sure they may not win on this point, but there goes the attorney bills again.
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If a lease is broken because the operator did not have a sound reason for delays in royalty payment, the operator probably eats any bonus money expended, but royalties should remain property of the operator up until the date of termination of the lease. I don't remember ever seeing a retroactive release of contract.
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Permalink Reply by kittycatmama on
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I was reading some legal precedents of leases being terminated for non payment. This co. just shut down our royalty pmt. They have given several explanations from "well isn't producing" (I have checked production and it is stable, so that was an out and out lie) to "they are checking in to see where our money is." I really do not like gas and oil companies anymore. I grew up with a Daddy in the business and always respected them, but not anymore after dealing with a few the past 5 yrs.
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