landowner

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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Oil & Gas ProPermalink Reply by HBP on December 26, 2013 at 5:50

I've just now had a chance to read this thread, but wanted to post that kittycatmama's persistence is a great quality in this situations.  In this relationship of Lessor / Lessee, and especially re: royalty payments, you get treated how you allow yourself to be treated.  So it is good to see owners watching their interest and keeping everyone honest and accurate.

Of course I am in the camp that says to always seek an attorney's help, but that is because I handle enough demands each month to know that sometimes its best to put them on notice while invoking the consequences of their inaction set forth in 31:137, et seq. (I would also recommend R. Davidson, especially if litigation is imminent).

kittycatmama mentioned some recoveries she has helped make, so there is a lot of progress to be had by just paying attention and addressing any errors through proper letters and persistence.  If that fails, then I guess its on the company when a group of owners is sitting in your lobby.


Oil & Gas ProPermalink Reply by Andrew on December 31, 2013 at 14:25
As usual, HBP hit the bulls eye.

To answer the original question, it is unlikely that a Louisiana mineral lease will be dissolved for delinquent production royalties alone. The lessee may be subject to harsh penalties for late payment if they were given proper notice by the lessor, but a court won't dissolve the lease unless justice cannot be done by damages alone, which usually means there's clear proof of outright fraud. Even then, the jury doesn't have to dissolve the lease if it doesn't think it's merited.

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