One of the best ways to create effective sales agreements in the oil and gas industry is to negotiate carefully and strategically. At Ehrlich & Pledger Law, LLP, we have helped many people in California formulate contracts that are concise and thorough.
When you sign a lease agreement and an oil and gas extraction company begins drilling on your land in California, you expect your percentage of the royalties to be consistent with sales. However, according to ProPublica, many large companies have developed ways to withhold money that rightfully belongs to landowners, and they are often successful because of a lack of disclosure laws and accountability measures.
A joint operating agreement is something commonly used in the oil and gas industries in California. If you are interested in getting into these industries, then you have likely heard of a JOA. The Oil & Gas Financial Journal explains that this type of agreement is part of establishing a joint venture. There is no one set format for a JOA that you have to use, but there are some common items typically included in all JOAs.
It is very common to hear in media reports and through activist groups about how dangerous and bad fracking is in California. However, the reality of it is that this process may not be anywhere near as horrible as everyone has been led to believe. Fracking is the name used for hydraulic fracturing, the process of injecting high-pressure liquid into the ground in order to remove fossil fuels. According to Forbes, research and studies have shown over and over that the suggested risks of fracking are non-existent.
If you have or potentially have oil or gas reserves on your land in California, you may believe that you have "struck it rich." And that may be the case. Your land could hold a substantial reserve of oil and gas that is viable for production. A well or group of wells could produce for many years, and they could add greatly to your income and your overall wealth.
If you own a piece of land in California and it potentially may have viable oil and gas reserves beneath it, it is important that you understand exactly what it is that you mean when you say you "own" the property. Property law is ancient, as ownership of land has always been important, and land does not disappear the way more transitory objects do.
For a landowner, securing an oil and gas lease with royalty payment may seem like a great victory. Developing an oil well from exploration to production is an expensive proposition, something few individuals could afford, but once it reaches production, it can seem like free money.
Most landowners have little experience with oil, gas and other mineral extraction leases. You or your family may have owned land for years or decades. You may not even understand the distinction between surface ownership and mineral ownership, as your property may not have been suspected of having oil or gas present, or if it was known, it may have been uneconomic to extract it.