Breaking an old Oil and Gas Lease
Written by Eric Johnson about Leases on June 10, 2012
How do you determine if your oil and gas lease is still in effect?
This is one of the most common questions we receive. It typically comes from landowners who had signed an oil and gas lease many years ago and want to take advantage of the current lease frenzy. That is, landowners who have signed an oil and gas lease in the 1970’s or 1980’s want to know if they are eligible for a new lease and the signing bonuses that come with it. The answer to this question can be very valuable, as bonus payments for signing an oil and gas lease today are much much higher than they were twenty or thirty years ago.
Like many questions concerning the law, the short answer to this question is: it depends. Generally speaking, if a person has signed an oil and gas lease in the past, it is pretty likely that they are ineligible for a new oil and gas lease. However, old oil and gas leases can and do expire. If this happens, a landowner would then probably be eligible to sign a new lease.
Determining if land is still under lease involves many factors. Some have to do with the timing of payments made by oil and gas producers. Others have to do with specific terms of the old lease. Some of the language in the old lease might not be favorable to drilling new wells. Broadly speaking, however, if a landowner is still receiving payments for a well on or nearby their land, it is pretty likely that the old lease is still in effect.
We realize that each landowner’s situation is different, and will not always fit squarely into one of the above circumstances. With the above in mind, we have helped landowners effectively break their current oil and gas lease. Contact our office if you believe your old lease has terminated.
About Eric Johnson
ERIC C. JOHNSON attended Ohio State University, earning a degree in economics and then graduated from the University of Cincinnati Law School in 1983. His areas of practice are personal injury law, real estate, oil and gas, contracts, litigation and appeals.