My wife recently received a letter and documents from the California Resources Corporation (formerly Vintage Petroleum). One document is entitled “Surrender and Quitclaim” (of the lease). We found our lease referenced on a list with over 35 other leases. Looks like they are terminating a bunch of leases in Kern Co. Has anyone else received notice or know what’s going on?
Oil companies take leases and quitclaim leases all the time. Sometimes it is because they decide that the prospect is not as attractive as they had thought, sometimes they can’t assemble a large enough acreage block to warrant exploitation, sometimes they just have to cut back on their budgets the way we all do with our personal expenditures. The thing to remember when you make a lease is to limit the primary term to no more than 5 years, and to be paid up front for the entire term. If you can’t negotiate a fully paid up lease, insist on a guaranteed annual rent for the entire term. Otherwise, you have granted a call option on your property, for no compensation whatever. Would you do that with a stock, or a building you were trying to sell? Options cost money. CRC is a respectable company, with a long history in Kern County. They aren’t required to tell you, but you can ask them why they walked away, and you will receive a courteous answer, even if it is noncommittal.
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