Experience Dealing With Oil Exploration Companies? [Mineral Rights]
My family owns the minerals rights for a parcel of land in Kern County, California. In previous years, oil was extracted from the property. After all the economically viable oil was extracted, the wells were shut down and the oil companies moved on. Now, the price of crude oil is consistently over $100 a barrel and oil companies are looking at oil deposits that previously were not economically viable to recover.
Recently, a representative from an oil exploration company randomly dropped by my parents’ house unannounced. He had a wonderful opportunity related to renewed drilling on this parcel of land in Kern County. They were so excited to get things moving that the representative had a contract in hand, ready for my parents to sign at that instant. My parents said they needed time to read through the contract and the representative arranged to return the very next day to pick up the signed contract.
This had my parents flustered. The contract was a bunch of vague lawyer jumble and was not very easy to understand. Do they actually get royalties or not from anything extracted from the site? Does this contract really grant them them rights to drill on the land for over twenty-something years? Are they saying they want to rent the mineral rights for only $20 per acre, per year?
Obviously, they needed a lawyer to properly digest this information. And where could one find a lawyer in one day?
The suddenness of this proposition left my parents with a funny feeling in their stomachs. They turned to the internet to see if they could find out more. After searching Google for the company name, they found the website of another individual who recounted a similar experience.
He basically says that the same representative showed up unannounced at his and his relative’s houses with a contract for oil and gas leases. This would give the company rights to drill the land. The author goes on to talk about the history of these men in the American West and how their job has been to get people to sign these contracts by any means necessary, regardless of what the contracts said.
The website goes on to document some of the deception, smooth talking and even threats that occurred in trying to get his family members to sign. This pretty much sealed the deal for my parents. They were not going to sign it without more information and without contacting an attorney.
The next day, the same representative stopped by to pick up the contract. My parents told him they were not going to sign it at this time. Undoubtedly, he must have been rather annoyed to drive out all that way only to find that his sure-deal fell through.
When they mentioned the website they found relating to previous interactions with representatives from this same company, the representative standing in their yard told them that the author was a “nut case” who had been “blacklisted” from any future contracts with the company. He also mentioned that they would sue him, but it “wasn’t worth the trouble.” He went on to say that the author’s opposition to leasing the mineral rights was a moot issue because they could always “slant drill into the property.” (Slant drilling into another property that you don’t specifically have the mineral rights for is illegal. Unfortunately, this is hard to prove.)
“Regardless, we’ll drain [their property] dry,” he said.
Has anyone else ever had any interaction with oil exploration companies, whether it was successful or not? What sorts of things are important to look for or do (i.e., hiring an attorney to sign any contract)?
(Note: Names have been intentionally left vague due to potential threats of libel/slander on behalf of said oil company.)
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