Harrison & Mecklenburg, Inc. Oil & Gas Law

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 & Watonga 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!