Oil & Gas Royalty Underpayment Attorneys in Oklahoma City
We Take on Injustice
In an era of unprecedented profits within the oil and gas industry, the American royalty owner is still very much at risk of being unfairly compensated by the operators and producers who routinely fail to pay fair royalties. Sometimes, producers make underpayments to royalty owners simply because of the complexities involved in today’s oil and gas leases and related agreements. However, producers often blatantly fail to pay fair royalties. In either case, the royalty owner has a legal claim for compensation. Producers have a responsibility to behave as a “reasonably prudent operator” under all circumstances. Unfortunately, it is often the case that the producers fail to obey many express and implied covenants in their leases, operating agreements, and unit agreements, which may ultimately result in gross underpayments being made to the oil and gas royalty owner.
When producers fail to act as a “reasonably prudent operator,” the following catastrophic consequences may occur:
- Royalties worth thousands or millions of dollars go unpaid
- Mineral estates are depleted, wasted, or destroyed
- Surface estates are damaged or polluted beyond remediation
- Incestuous marketing arrangements burden mineral estates for decades
Gas Companies Reportedly Withholding Up to 90% of Royalty Payments
Some landowners have reported that companies are withholding as much 90% of royalty payments for unspecified costs and “gathering” expenses. Gathering is the process by which natural gas from individual pipelines is mixed with that from other properties and companies.
Other costs for which companies withhold or deduct payments include:
- Transportation, including across land not owned by the leaseholder
- Natural gas processing
- Unsold fuel
- Fuel used to power company equipment, including equipment used in gas extraction process
- Gas sold at a reduced or lower-than-market-value-rate to a company subsidiary
It has been reported that, in some cases, landowners had royalties withheld even when their contracts specifically forbade these practices. Landowners may have also signed lease agreements without fully understanding the terms to which they were agreeing — or their legal rights.
Do You Have Questions?
At Fulmer Sill, we are proud to deliver high-quality assistance to all our clients. We are confident that our experience and knowledge will produce a favorable outcome for you. All initial consultations are free, and we don’t charge any up-front fees for representation. Fulmer Sill handles all fees on a contingency basis, meaning that unless we’re successful, you don’t have to pay us.