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.
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.
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.
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 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 current presidential administration is making changes to a 1972 law that gave coastal states like California the right to stall or stop offshore drilling in federal waters. Governors of states up and down both coastlines contested a recent proposal to open all coastlines to offshore gas and oil drilling according to the Los Angeles Times.
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.
The oil and gas industry in California are booming and is highly competitive. Interested natural gas investors are constantly scouring the industry for opportunities to capitalize on potential discovery opportunities. Investors who intend to be successful and remain in the industry as respected leaders must be strategic about delegating responsibilities and making the types of business decisions that will allow them to make competitive movements.
Ideally, the agreement between a mineral rights owner in California and an oil and gas company to drill a well should be a mutually beneficial arrangement. The oil company has the equipment and expertise necessary to reap the bounty of your estate, and you get a percentage of the profits. According to MineralWise, however, the value of your mineral rights can vary widely on the basis of several different factors, some of which you have little to no control over.
We have focused on many aspects of oil and gas disputes on this blog, such as some of the reasons why business owners find themselves in the middle of a disagreement. As the owner of an oil and gas company, you should also think of the potential consequences associated with a dispute. Aside from financial headaches, you may face serious and potentially long-term complications depending on how the dispute plays out in court. Across the state of California, it is pivotal for oil and gas company owners to be prepared for these setbacks.