My lease has a clause for late payment of royalties. Even though my contact information was on the lease, the operator could not “find” me until I contacted the operator to find out why they had never sent a Division Order to me. Two months later they did, but, by that time a substantial amount was owed for the late payment. They just told me that they will not pay the penalty. My question is two-fold. If the operator refuses to pay the penalty, can the lease be broken? If broken, how does this translate into my ownership of the production?
Due to your statement that it is a substantial amount, if it were me, I would seek legal assistance. Every document will read different and your lease has the information needed to solve your questions.
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You didn’t say if you changed address, or whether your operator is a major company (with a formalized division order department). My lease item-5 reads that lessee must accept division ownership changes within 30 days of receipt of certified mail notification. My operator has processed changes promptly by e-mailed documents, but I guess they could stand on the certified mail requirement if they chose.
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