Q: I have mineral rights and I found out a company has been drilling on those right for years and I have never been paid
I have contacted the company that is drilling and they say there is royalties that have accrued but they haven't paid them. This is not the company that the lease was signed with also I have contacted the company that is drilling and they say there is royalties that have accrued but they haven't paid them. This is not the company that the 2016 lease was signed with. The company said they just need a Division Order signed to start paying. With this being 6 years after the original lease signed and the term for 3 years, supposedly they started drilling 3 years into the lease. But with nothing ever being paid does that void the lease?
A: Leases can be bought and sold many times before and after there is production so it is not uncommon for the operator of the well not to be the original lessee. Royalties are suspended because the operator can not mineral owner the owner or there is an issue with the title of the property that prevents the oil company from paying proceeds. Often times there are missing probates or other issues with the title. You should ask the companies the reason for the monies being suspended and also what needs to be done to correct the issue. You may need an attorney to help you correct any defects. You should also check with the state unclaimed property division to make sure no moneys have been paid over to the state.
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Even though the initial lease term was 3 years, most leases provide that if there is production that commences within the original lease term, then the term of the lease is automatically extended so long as there is production in paying quantities. You would need to look at the language of your particular lease to see if this is the case.
If there was a title problem or the oil company couldn't locate you, it is doubtful that nonpayment of royalties to you would void the lease, but that is something that depends in large part on the language of your lease. You should have an attorney look at your lease and see what the effect of nonpayment is.
I would also recommend that you have an attorney review the division order to be sure it does not contradict terms in the lease.
Keep in mind that in many cases oil companies are only liable to pay you back royalties for 4 years in the past. Thus, this is something you may want to have an attorney look at sooner rather than later.
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