With oil and gas prices continuing to remain low, the possibility and actuality of bankruptcy in the oil and gas industry continues to rise, or at a minimum, financial problems may plague operators with now limited capital trying to hand on. As a landowner or mineral owner it is important to be proactive to protect your rights.
In Bankruptcy
If you as a land or mineral owner receive a bankruptcy notice, pay attention and review the notice. If you are owed back royalties or other payments, it is likely that you will need to file a claim to protect your rights. Bankruptcy proceedings contain strict deadlines and it’s best to be timely in submitting any claims. These deadlines can be quick so be sure you are reading the fine print.
Surface Operations
With a decrease in available capital, you, as a landowner, may see the quality or response to surface use issues decline. Again, it is important to be pro-active and make sure operators are staying on top of their surface obligations. The best course is always to work directly with an operator where you can. While some patience might be tolerated for some delays, staying on top of the situation is advised. Often times it may make sense to amend a surface use agreement to permit an operator additional time to reclaim or take other action at a well site; however, such extensions should also be coupled with additional consideration to the landowner such as an additional payment upfront for the extension or stronger rights if the time period for extension is not met.
Ultimately, if an operator does not response or adhere to a surface use agreement, consider other avenues. Within Colorado, the Colorado Oil and Gas Conservation Commission may have jurisdiction regarding operations, or you may need to review your surface use agreement as to venue for disputes or a breach. Also note that many surface use agreement requires notice and an opportunity to correct prior to initiating a complaint or action.
In any event, prudence and diligence in addressing delays by an operator can help ensure that your property and mineral interest stay as a priority as much as feasible during these times.
Jenna H. Keller, Esq.
Attorney at Keller Law, LLC. (www.kellerlawllc.com)
The information is for general information purposes only. This should not be substituted for legal advice and should not be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or reading does not constitute, an attorney-client relationship. You are encouraged to contact an attorney for legal advice concerning the information provided.