California Oil and Gas Law Blog

In some parts of the country, blue collar workers have been hit hard by financial challenges and job losses. Some people in this position have benefited from oil and gas leases, which have helped combat these economic challenges. However, some of those who lease oil and gas rights change their minds or disagree with the way in which a project is being executed. This may be due to confusion about the terms of a lease or a property owner's refusal to abide by the terms of a lease. In some cases, this can lead to a heated dispute, which may be very hard for an oil and gas company to deal with.

If you are in the middle of a dispute over an oil and gas lease, it is crucial to do everything in your power to find a successful resolution. You may be able to resolve the disagreement outside of the courtroom, but there are times when legal action cannot be avoided. In these instances, it is imperative to carefully pore over the details of the agreement and have a firm understanding of your rights and the lease. Depending on the outcome of the dispute, this roadblock could have a major impact on future operations and the overall health of your business.

The term "mineral right" implies that one's claim to ownership extends only to the minerals found from beneath the ground of a property in California. This distinction is made due to the fact that a separate ownership category exists defining surface rights. In many agreements, the owner of a property retains the surface rights and simply sells or leases the rights to the minerals found therein to different extraction companies. Yet there are scenarios where the two terms can be blurred, thus allowing mineral rights owners to have certain surface rights, as well. 

The most obvious of these would be express rights detailed in either a sale or lease contract. Surface rights conceded by property owners typically include structure permits and extraction methodologies, as they may care less about the method through which the mineral rights owners conducts its work as they do in being compensated for the use of the land. Yet California law does indeed open the door to interpretation when it comes to additional surface rights. In defining "mineral rights," Section 883.110 of the California Civil Code states that such rights include any "express or implied appurtenant surface rights." 

If someone has approached you with a lease offer for the minerals or the oil on your California land, it is not unreasonable to think the person who is talking with you represents a company that excavates minerals or other natural resources. Sometimes this is the case. However, there is the chance the party you are conversing with is actually farther removed from an actual drilling operation or has no ability to drill at all.

As Mineralwise explains, the party that approaches you for mineral rights could be one of three types. As previously stated, sometimes you are contacted by a person who actually works for an excavating outfit such as an oil and gas company. For instance, a landman that is directly employed by the oil company itself might talk to you about granting the oil company a lease.

Whether you are the owner of land in California or the representative of a company interested in accessing the resources that may lay below the surface of a particular piece of property, it is important for you to understand how agreements between these parties may work. When entering into any contract involving the rights to a mineral, whether rock, oil or something else, great care should be taken to identify the fine details in order to prevent future disputes.

As explained by Geology.com, a mineral rights contract may be structured in a number of ways. One option is to establish a lease that grants access to the land for a limited period of time. The intention here is that a company can use this time to explore and test the viability of any resource presence and production opportunity during this time. At the end of the lease period, they may pursue a purchase or walk away and all rights then return to the land owner.