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Oil/Gas/leasing after oil co. bankrupcy


I received legal doc's stating the oil company went bankrupt that held one of our leases. Currently, most sections surrounding this section are in production with all new wells and new pipeline being installed completely surrounding this section. Could a bankruptcy hinder a new lease being developed for this section or does the interests become open for negotiation again.

A bankruptcy will hinder your lease from being developed as the leasehold interest is considered an asset by the bankruptcy trustee and court.  The lease is an asset of the entity and can be sold to another company and developed or the company can reorganize and develop the interest.

Either way - the lease is probably going to be developed (if it is ever drilled under this lease) after the bankruptcy is completed.  

The one caveat is that the lease terms will limit the company, trustee and the bankruptcy court.  If the lease says that rentals must be paid or the lease terminates then the rentals must be paid.  Also, if the primary term is 3 years and if there is no development then the lease terminates. In other words, the terms of the lease will still control.

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Cliff Williams


I will try to answer any question you have. Even if I reject a question, I still will give a shot at what I would do in your position. The only questions I will not take a shot at would be a highly technical engineering or geological question. I am beginning to see quite a few questions from land men and other oil companies and that doesn't matter to me either. I will attempt to help.


I am an oil and gas attorney that has been in the business for more than 20 years. I have held a series 22 and 63 securities license, been in oil and gas operations, land man, division order analyst all prior to obtaining my law degree. Today, I typically write title opinions verifying ownership of oil and gas minerals, assist landowners in negotiations on oil, gas and mineral leases, easements and conveyances. I also assist oil and gas companies with the sale of working interest ownership as well as common business law issues.

State Bar of Texas, Member of the Tarrant County Bar and the Dallas County Bar Associations.

Multiple oil and gas topical columns on

I have a B.S. degree which I rely upon more than my Business Mgmt degree or Law degree...

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