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California Oil and Gas Law Blog

When to inspect an oil lease

At Ehrlich • Pledger Law, LLP, we understand that emotions tend to run high when oil and gas leases are involved. For prospective sellers, these contracts have the potential to represent a serious windfall. For buyers, they are a major investment. It is natural for nerves to get frayed when this much is at stake.

Nevertheless, it often takes a level head to go through gas and oil lease documents with an eye for detail. Even relatively common forms of these leases often contain — or could benefit from, for that matter — language that pertains specifically to the deal in question.

Is the U.S. in danger of oversupply?

The oil and gas industry, like many other industries in the United States, is a fine balance between production and overproduction. The risk of oversupply can affect the stability of many oil producers in California as well as across the country. With the importation of oil and gas from other countries, it is critical to keep an eye on local oil companies and how this can affect their ability to survive. 

Although the market is expected to be volatile in price and production, experts are seeing a trend that local U.S. producers will be able to overcome any challenges this may bring. A contract between the U.S., the Organization of the Petroleum Exporting Countries and Russia says that limited supplies will be sent to the U.S. from these foreign regions. This will give local industries a better chance to control prices and will reduce the threat of oversupply in the U.S. 

Supervisors allegedly taking personal profits

The California Department of Conservation’s Division of Oil, Gas and Geothermal Resources is responsible for providing the state with drilling permits, keeping the environment and economy’s best interests in mind. Yet some people believe that supervisors in these departments are looking out for their personal interests rather than those of the state and its citizens.

Consumer watch groups are pointing their fingers at certain supervisors alleging that they are taking personal profits from the issuance drilling permits. The supervisors that are in charge over the department should have a separation of interests when it comes to approving drilling permits, performing inspections with drilling companies and regulating the industry. The drilling industry, like any other industry in the U.S., must follow certain restrictions and standards. If these standards are not met, it could endanger the public and the environment for future generations. 

Protect the value of your royalties with these tips

If you are considering whether or not to sell some of your mineral royalties in California, chances are you are going to want to find a buyer who will respect the value of your assets. At Erhlich Pledger Law, LLP, we have considerable experience helping people to make strategic decisions when they are working with oil and gas transactions. 

As with anything, there are more appropriate times than others to consider selling your royalties to someone else. Deciding when to begin soliciting your royalties is a matter of how much you wish to get for them, the condition of the market, the appeal of the royalties you are selling and how willing you are to spend time finding an ideal buyer. 

How much should mineral royalties be?

The California gas and oil businesses are complex. If you own land or mineral rights, you probably work with those who hold interests or leases in the minerals, mining rights or royalties. Normally, contracts with these individuals and companies could provide consistent value to you as an owner. However, things do not always go as smoothly as intended.

Generally speaking, you can prevent many mineral disputes by establishing sound and fair contracts at the outset of a business partnership. Here is some information about establishing lasting royalty agreements, including some typical industry conventions on pricing.

Financial concerns regarding oil and gas disputes

Oil and gas disputes take place for a myriad of reasons, and our law office has provided many examples of why these disputes arise throughout our website. When an oil and gas dispute comes up, it can result in many different consequences, regardless of the reason(s) behind the dispute. Not only can a business' reputation be on the line, but stressful legal challenges may lie ahead. Moreover, the financial impact of such a dispute can be enormous, and we will examine some financial concerns associated with these disputes in this blog post.

For starters, an oil and gas dispute may result in significant legal fees and even penalties, if the outcome is unfavorable. Moreover, an oil and gas company may be hit hard when they are no longer able to move forward with a project that they were counting on. The aftermath of a bitter dispute may also generate long-term financial concerns, some of which may even threaten the future of an oil and gas company altogether. In some instances, the financial fallout of an oil and gas dispute has prompted business owners to shut down permanently.

Resolving an oil and gas lease dispute

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.

New plan proposes 37 new oil and gas wells

California residents know that the state in which they live is rich with many natural resources. Among these resources are oil and gas. While necessary for most people's everyday lives to run as they do, the collection and use of oil and natural gas can be a source of contention among politicians, business people and citizens. In California, this has led to a halting of leasing federal land to oil and gas companies for several years with the last lease sale on record taking place in 2013. This, however, may be set to change in the near future.

The current presidential administration has recently made two announcements providing information on its intention to open up more than 1.7 million acres of private and public land throughout the state for oil and gas exploration. As reported by The Los Angeles Times, the latest announcement concerns more than 725,000 acres in the central portion of the state staring in the San Joaquin Valley and running west to the coast. The region spans 11 counties with the bulk of the land falling in San Benito, Monterey and Fresno Counties.

Identifying implied surface rights

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." 

States may receive more federal royalty money

California is a land ripe with many natural resources which result in some of its land being leased out for the sole purpose of harvesting these resources. Some land may be leased from private individuals or corporations while other land may involve leases with the federal government. When the federal government is involved, it may end up paying the state of California royalties.

The amount of money paid by the federal government to the state for leases involving the extraction of natural gas and oil has been the subject of legal action and political policy over the past couple of years. As reported by Courthouse News Service, effective January 2017, the federal government was supposed to increase the amount of money it paid to states for these royalties per an order dated July 2016.


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