The state of Texas is known for being a major producer of oil and related products. The specific laws and regulations governing the oil and gas industry can be complex, and when disputes arise, an experienced Houston commercial litigation attorney is necessary.
The trial lawyers of Feldman & Feldman have helped both oil companies and property owners reach fair agreements when it comes to the extraction of oil and other minerals and the resulting royalties paid. All parties have rights in disputes over drilling, land ownership, environmental cleanup, and more. Our lawyers will ensure your rights as a property owner or business owner are protected.
Why Landowners Need a Houston Oil and Gas Lawyer
As a landowner whose property contains oil, you have certain legal rights. Before entering into an agreement with an oil company, you need an experienced oil and gas lawyer on your side to ensure the terms are fair.
Are you involved in an oil agreement that you’re not sure is fair or being legally carried out? One of our energy attorneys can evaluate your current agreement and determine whether or not it is lawful. You have the right to be paid the royalties you are due, and a Houston oil and gas lawyer can help you get your rightful portion of the profits.
Types of Legal Matters Related to Oil and Gas
There are many different types of legal issues arising in the oil and gas industry, such as:
- Royalty disputes
- Water rights
- EPA and environmental cleanup liability
- Mineral rights
- Drainage issues
- Seismic surveys
- Lease agreements
- Pooled agreements
- Surface agreements
- Indemnification and insurance
With so many considerations before, during, and after drilling takes place, an experienced business attorney should be involved every step of the way.
Oil and Gas Royalty Disputes
If you own property in the Greater Houston are or elsewhere in Texas, it is likely that you understand what a hot commodity mineral rights can be. Property owners have the potential to make some serious money if oil or gas deposits are located on their property. Disputes can occur regarding the royalties that oil and gas companies pay the property owners for access to the mineral rights.
You may need a Houston oil and gas attorney to help you resolve oil and gas royalty disputes fairly and effectively.
Reasons Oil and Gas Royalty Disputes Arise
Disputes over oil and gas royalties occur for various reasons. Some of the more common energy industry disputes handled by Feldman & Feldman include:
- Claims for failing to market production adequately
- Concerns about post-production cost deduction claims
- Royalty claims and their market value
- Discrepancy provisions in division orders and leases
- Lease beneficiary disputes and producing companies
- Delayed royalty payments and nonpayment disputes
- Faulty division of order title opinions
An attorney with experience handling oil or gas royalty disputes is crucial to favorably resolving these conflicts.
What Oil and Gas Disputes Are
When oil or gas is found on a piece of property, there may be disputes over who owns the mineral rights. This can be a challenging issue to address, and large oil and gas companies have teams of lawyers to ensure they profit from the findings. Having someone at your side to help you navigate such disputes is critical to a resolution that benefits you and your family.
How to Handle Harassment by Oil and Gas Companies
If you are being harassed by oil and gas companies, be aware this is not acceptable. You should seek legal counsel promptly. These companies have been known to infringe on a property owner’s land and / or to harass them into short-selling their mineral rights or giving them up altogether.
Don’t let the big oil and gas companies do this to you. Contact Feldman & Feldman immediately. Our team of experienced oil and gas dispute attorneys will ensure your rights are protected and will always keep you abreast of your options. We can help you follow through with legal intervention to stop the harassment. These companies know that most people have no experience dealing with royalties and mineral rights, so they will use this imbalance of power and knowledge to intimidate property owners to get what they want.
A Houston gas and oil lawyer at Feldman & Feldman can advise you on how your mineral rights should be handled and can ensure your property rights and royalties are fair and protected. Let us protect your economic interests if you decide that selling your mineral rights is right for you.
Houston Oil and Gas Leases
The oil and gas industry thrives in Texas because property owners can lease the mineral rights on their property and benefit from the royalties their land produces. If you have oil and gas deposits on your property, you should understand the composition of a gas and oil lease. At Feldman & Feldman, we have experience with drafting, negotiating, and amending leasing agreements and can help you secure one that truly benefits you and your family.
Three factors must exist to have a legally binding gas and oil lease:
- A detailed, accurate, specific land description so that the property is easily identified
- Detailed terms of the lease
- Royalty reserve for the person or entity leasing the property
The detailed terms of the lease are divided into two distinct parts:
- The primary term is the period of time the lease will last. Usually, this is designated in years. During a designated time period, the oil company will be able to explore for oil. If it is not found, the lease will then end.
- The secondary term begins when oil and / or gas are being produced on the property. This portion of the lease will last until the land stops producing.
Royalties
Royalties are another important factor when agreeing to a lease. This is the royalty the lessor will receive from the production of the oil and gas from their property. The person or entity leasing the property to the oil and gas company will obtain a percentage of the value of the oil and gas produced from their property. This could mean that the property owner receives an eighth to a fourth interest, depending on the terms of the lease contract that was agreed upon.
Lease Provisions
There are many contractual provisions that are available to lessors and lessees. These clauses can provide for other aspects of a lease and protect everyone’s interest. Common such oil and gas lease provisions include:
- Bonuses: Aside from the three required components listed above, further provisions can be negotiated in an oil and gas contract. Bonuses can be negotiated for the lessor. This income can be generated by the amount of money each mineral acre brings in. The formula for determining this is multiplying the lessor’s interest by the number of acres they leased. So, if the parties agreed to an eighth of a share of the mineral interests, if there were 1000 acres included in the lease, the lessor would own 125 net mineral acres.
- Delay rental: Delay rental is another fairly standard provision. The provision typically designates an amount the lessee pays if the land does not produce oil during the primary term. The lessee would pay a designated amount to the lessor to continue the lease so it does not expire. The way these are currently being handled is by paying an advance. This means the lessee pays an extra, agreed-upon sum for a designated period of time – for instance, three years. The lease would be considered “paid-up,” and there is sometimes an option to extend the lease by an extra period.
- Proportionate reduction: Since landowners may not own the full mineral rights on their property, the proportional reduction is another provision that may be included in a well-negotiated lease. These entitle a landowner to a royalty in proportion to their mineral rights ownership.
- Temporary cessation: This protects the lease and keeps it going if the production of oil and gas is interrupted or ceases.
- Shut-in royalty: This protects the lessee by allowing them to keep the lease going in the case that the market fluctuates and makes the oil and gas that the land has already produced hard to sell. It allows them to continue the lease, even if they are not actively producing.
- Pooling: Because gas and oil have been overproduced, the Texas Railroad Commission resolved that there needed to be a designated amount of space between wells. In some areas, the space was inadequate for production, so areas could be pooled together to produce the monthly allotment of oil for the month. This requires lessees to pay royalties for a designated portion of the pooled unit.
Surface Use Provision
As you know, oil and gas deposits are underground, but the process of removing them is not. When leasing their land, landowners have some say about how much of the surface area can be used. The parties agree on how much surface area is reasonable to use to extract the oil and gas.
The company has a designated amount of acreage they can use by using the land’s water, building roads, and adding pipelines and other necessary equipment to the land to make oil and gas production work. This agreement must be in place so that the lessee has established boundaries. By designating the amount of surface area that should be used, the lessor will not be awarded any compensatory damages for how the land is used since any effects will nearly always be considered reasonably necessary damages.
Lessors may negotiate their leases to allow more control over how their land is used. The following are some topics that might be addressed:
- How a tract of land can be accessed
- Where the tract of land can be accessed
- Compensation for the use of water found on the land, since hydraulic fracking requires a considerable amount of water
By understanding how your land might be affected, you can negotiate a better, more comprehensive oil and gas lease agreement. By allowing Feldman & Feldman to negotiate and advise you on your lease agreement, you can rest assured that you will receive a fair and beneficial deal that does not take advantage of you and that provides profits for you and your family today and in the future.
The Intricacies of Negotiating with Oil and Gas Companies
If you own land that an oil and gas company has tapped for a lease, or if the oil and gas deposit on your land is in jeopardy of being drained by a nearby well, it is important that you contact the attorneys of Feldman & Feldman for advice. We are skilled negotiators and understand all of the intricacies of developing an effective lease and handling gas and oil royalty dispute issues. Protect the value of the property you own and the mineral rights you are entitled to by seeking legal counsel today.
Why Oil and Gas Companies Need Business Lawyers
Oil and gas companies have certain legal obligations to the landowners they enter into agreements with, as well as to the state of Texas and the environment. To get the most out of oil agreements and avoid unnecessary litigation, oil companies should work closely with an experienced business lawyer well-versed in the energy industry.
An oil company involved in a lease with a landowner has the responsibility to:
- Avoid draining a property of oil from a nearby oil well.
- Pay royalties according to the terms of the lease.
- Not pool land with other land containing no valuable materials (oil, gas, minerals, etc.).
- Protect royalty interest against loss.
Failure to do any or all of the above may result in disputes with landowners and unwanted litigation. Laws are put in place to protect both oil companies and landowners involved in oil and gas lease agreements.
Protect Your Rights with the Help of the Houston Oil and Gas Lawyers of Feldman & Feldman
Whether you’re a landowner or an oil company, it helps to have an experienced commercial litigation attorney on your side. The civil trial lawyers of Feldman & Feldman have experience working with clients on all sides of oil and gas agreements and disputes. We represent landowners, helping them get the royalties they deserve and ensuring they only enter into fair agreements. We also help oil companies avoid unwanted and costly litigation. Contact Feldman & Feldman today to schedule a consultation.