Oil & Gas FAQ Answers to Common Questions from Our Attorneys

Oil & Gas Common Questions

What Are the Duties of an Oil & Gas Company Under a Lease?

In addition to specific obligations that are spelled out in an oil and gas lease, oil and gas companies have certain express and implied duties under Texas law. Among them are the following:

  • Duty to Develop - An oil and gas company may have an implied duty to develop the lease to the extent that a reasonable and prudent operator would have.
  • Duty to Protect Against Drainage - A company may have an implied obligation to drill an offset well to protect a common reservoir from drainage if a well is drilled to extract its resources from an adjacent tract of land.
  • Duty to Market - Courts impose upon a lessee the duty to market hydrocarbons produced from a well and to obtain the best price and terms possible for the sale of production.

Can I Break an Existing Oil & Gas Lease?

In some cases, circumstances may allow a landowner to break an existing lease. Oil and gas lease agreements are complex and nuanced contracts whose language may afford a reasonable exit from an existing lease.

An experienced oil and gas attorney can review your lease and advise you of your options.

The Lease on My Property Is Old. The Company Wants to Negotiate a New Lease Because of New Drilling Techniques. Is That Fairly Standard?

Many oil and gas leases were established years before advanced drilling and production techniques were developed. As a result, the terms of your current lease may not allow the company to utilize new technology without your permission. This situation may provide you with an opportunity for you to either consider renegotiation of the lease or breaking it, depending upon multiple factors. We can discuss your lease for a better assessment of your options.

What Is the Barnett Shale?

The Barnett Shale is a natural gas-rich geological formation in Texas that is estimated to stretch from the city of Dallas to west of the city of Fort Worth and south, covering 5,000 square miles and at least 17 counties.

I Own Property in the Barnett Shale Area & I've Been Approached About an Oil & Gas Lease. Do I Need to Speak with an Attorney?

Although you may have already spoken with neighbors and others who have signed leases, it is a good idea to speak with an attorney experienced in oil and gas law. You will be better equipped to protect your rights as a landowner, and you can avoid signing a lease without fully understanding the long-term ramifications.

What Is the Haynesville Shale?

The Haynesville Shale is a natural gas-rich geological formation in northwestern Louisiana, southwestern Arkansas, and eastern Texas. The most productive regions include Caddo, Bienville, Bossier, DeSoto, Red River, and Webster parishes in Louisiana and adjacent regions in southwest Arkansas and east Texas.

What Is the Standard Oil & Gas Royalty Paid to Landowners?

There is no standard oil and gas royalty. Oil and gas royalty rates are driven by a number of market forces and vary over time. Royalty rates as high as 28% have been offered in high demand areas like the Barnett Shale and Haynesville Shale, but these rates are not necessarily the norm. If you are negotiating an oil and gas lease, an experienced oil and gas attorney may be able to help you maximize oil and gas royalty rates.

What Are Oil & Mineral Rights?

Oil and gas mineral rights are the rights to explore, remove, and produce oil or gas located in or under a specific land property. In some areas, these rights are separate from the actual ownership of the land itself.

I Inherited a Farm But I Recently Learned Someone Else Owns the Oil & Gas Mineral Rights. What Does This Mean?

This means that while you own the land and essentially the surface of that land, another person or company owns the right to any oil or gas contained beneath the surface. Often, the owner of the mineral rights will approach you with an agreement to allow them to drill without actually buying your land.

I Entered into an Agreement, But Now My Property Is Polluted. Can I Sue Even Though I Did Agree to Allow Them to Drill?

Companies are obligated to protect your property from environmental harm. Typically, this is spelled out in the land protection terms of the lease between you and the oil company. If the oil company failed to use safe, responsible drilling and production methods and caused environmental damage as a result, you may have grounds for a lawsuit.

Learn more about your rights during a legal matter pertaining to oil and gas. Contact our office today.

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