We have an operator#1 who has leased (oil and gas) a small area of land for years. The owner (older lady) dies and wills her property to her church. The church sells half of the property top side to another (operator#2) The first operator#1 applies for a permit to drill two wells on the original ladies property. The operator#2/ buyer of half the land and the driller are in Agreement to use the terms on the original lease and the church agrees to use the original lease 12.5% of production sells.
So the driller gets the permit from KY Oil and Gas division with the Church and the buyer /operator #2 each half owners of the land.
Operator #1 hits oil on both permits and significant for Kentucky production.
Well the oil pick up and distributor of this oil has a check for over $500,000 to distribute to the % aggregate owners.
Now come to find out the Church had sold the other half of the land and mineral rights to an out of state oil company. The current operators of the church had no knowledge of the 2nd half of their land sell, they were wanting their share.
The first buyer of half of the land operator#2, is happy with his 6 1/4%. The new unknown owner of the church land, never looked into any of the mineral rights with operator#1 who’s doing the drilling, until oil is coming out of the ground. So the new 1/2 owner is demanding 50% of the production $ sold.
I would have thought the state would have checked the landowners before signing a permit to drill.
Shouldn’t new 1/2 land owner and operator #1go by the original mineral rights agreement since the new 1/2 landowner never attempted to request a new negotiated lease agreement. Operator #1 had no idea the land owners had changed because he contacted the church and they said it was fine to proceed to drill.
Operator #1 at 50% might have to pay out up to $1 million to this ass that will not work fair and get his half of between 10-12.5% which is what all the wells drilled is payed to the land owners.
Any solid advise would be appreciated. Thank you. . .
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