Oklahoma Oil & Gas Law FAQ
Frequently Asked Questions about Oil & Gas Law in Oklahoma
Whether you are a property owner that is leasing out your land to an oil
and gas manufacturer, or if you work for an oil and gas company, it's
important to understand the laws as they pertain to oil and gas production,
as well as your legal rights and responsibilities. Oil and gas contracts
are different than other standard business contracts; therefore, it's
essential that you are familiar with the state and federal rules and regulations
pertaining to gas and oil law. At Harrison & Mecklenburg, Inc., we
have been handling oil and gas contracts and disputes since 1987.
We have compiled a list of some frequently asked questions that we encounter
on a regular basis, for more information regarding your legal matter;
please don't hesitate to contact a
Kingfisher attorney from our firm. We also serve clients in Stillwater, OK.
What is oil and gas law?
In the United States, oil and gas law is the branch of law that pertains
to the acquisition and ownership rights of both oil and gas. Oil and gas
law involves those rights both under the soil before it's discovered
and after it's captured, as well as the adjudication of those rights.
Who regulates the extraction of oil and gas?
In the United States the extraction of oil and gas is regulated by state
laws; however, federal laws are applicable as well.
Who can have rights to oil and gas?
Oil and gas rights of a particular parcel can be owned by corporations,
Indian tribes, private individuals, as well as local, state or federal
governments. In essence, oil and gas rights extend downward from the property
line; therefore, virtually anyone that can legally purchase property can
enjoy the rights to oil and gas.
Are there any exceptions to ownership?
The rights to oil and gas can be explicitly separated by a deed, and once
that ownership is severed from surface ownership, then oil and gas rights
may be bought, sold, or transferred, the same as other real estate property.
I have mineral rights; do I still have rights to the oil down below?
Assuming your mineral rights have not been severed, then you own everything
below the surface. Of course this is limited by your surface rights.
My neighbor is drilling oil that is flowing from my property, is this legal?
Oil and gas are fluids; therefore, they may easily flow across property
boundaries and into neighboring property. In this case, an operator may
lawfully extract oil and gas from beneath the land of another, providing
the extraction is lawfully conducted on his property.
What is the "exclusive right to take" theory?
Oklahoma has adopted the "exclusive right to take" theory. This
means that a landowner doesn't own the substance that lies beneath
his land, but he retains the exclusive right to capture the substance.
Do oil and gas companies own the land they drill on?
Not always. It is common practice for an oil and gas production company
(the lessee) to lease the mineral rights from the owner (lessor). In cases
such as these, the lease agreement will include provisions about the description
of the property, the duration of the lease, and the payments to the lessor.
What other rights to lessees have to property?
When an oil and gas company leases mineral rights, they have a right to
reasonable access to the leased land to explore, develop, and transport
minerals, unless the lease is a "no-surface access" lease.
How long does the average lease last?
The lease between the oil and gas company and the landowner remains in
effect for a specified period of time; this is called the primary term,
providing the lessee pays their annual rental. The lease will expire after
the primary term, unless drilling and gas production has been established.
If production has been established, then the lease will remain in effect
beyond the primary term and as long as the lease continues to produce
oil or gas.
What are "delay rentals?"
These are fees paid to the lessor to delay the production or the commencement
of drilling, and without terminating the lease.
What types of payments are made to the lessor?
Payments to landowner generally come in the forms of bonuses, rentals
and royalties. Bonuses are upfront payments that are made at the time
the lease goes into effect, rentals are annual payments that are generally
made at the time the property begins to produce oil or gas in large quantities,
and royalties are a portion of the value of any oil or gas that is produced
from the lease.
Kingfisher & Stillwater Oil & Gas Law Attorney
Oil and gas companies generally have their own attorneys that advise the
company of their rights and responsibilities under the law, and these
attorneys are often assisted by petroleum landmen who are often attorneys
themselves. Landmen will examine property titles as well as land oil and
gas rights, and they will help the company acquire property. Oil and gas
lawyers may also be represent private parties, particularly when an oil
company is trying to obtain land from the private party.
It's important for private parties to obtain legal counsel so they
can become informed of his or her rights and so they can negotiate a favorable
and profitable contract with the oil company. If you need legal assistance
with an oil and gas law matter, please contact a Kingfisher oil and gas
law attorney from
Harrison & Mecklenburg, Inc. We look forward to hearing from you!