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Question
My husband and his family have recently been contacted asking them to sign an oil and gas lease for their inherited 3.75 acres in Stephens County,Oklahoma.  It appears that other family members have already been receiving payments for past production.  If his lease is signed now is he entitled to an accounting and payment of past production from this property? How does this work?

Answer
In the typical situation the answer is yes - he should be entitled to any funds which should currently be held in suspense.  If your husband owned the minerals at the signing of the lease and we can presume that he did because they are wanting him to sign the lease...then he owned the minerals prior to the lease signing and would be due any proceeds for prior production.

I would call the company and ask them when the well went online and began selling oil and gas.  You could also call the Oklahoma Taxing authority and tell them where the well is and ask when the operator began reporting income from the well.  This will give you a rough estimate.  Then call the company armed with the production information and ask them where your funds are for this period.

They will tell you that you were considered a "working interest owner" prior to the signing of the lease and with that designation there were certain expenses that ate up the interest.  Therefore, you will tell the landman that you must include a clause in the lease form stipulating that:

"This lease is retroactive to the date of first production of any and all wells located upon the leased premises and sale(s) for the purposes of calculating landowner royalty.  You shall be entitled to royalty from first production through the execution of this lease agreement."

This should help you in obtaining the royalty.  

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Cliff Williams

Expertise

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.

Experience

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.

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

Publications
Multiple oil and gas topical columns on ezine.com.

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

Awards and Honors
Husband and father of 26 years

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