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Sea Witch
01-19-2012, 10:36 PM
Since people from this forum seem to know the most obscure things, I'll ask a question.

In Canada (I used to work in this industry so I know how Canada works but not other places), if an oil company is not paying the correct amount (or at all) for a surface lease, the person being wronged can only collect up to 3 years back. Are there any limits like this in the US?

Same question for overrides?

Thanks

Snick
01-20-2012, 12:42 AM
I don't know specifically for oil companies, but in general it would vary from state to state, and it might also depend on the way the claim was put forth. It could also depend on who owned the land and how the lease as set up.

You probably should specify the owner and the location. With that information you probably could find the information online.

jclarkdawe
01-20-2012, 07:46 AM
I've never seen an oil lease, although I have seen mineral leases. Ignoring the contract, you would have until the statute of limitations ran, which is somewhere in the range of two to four years, depending upon which state the property is located in. But more likely the damages are governed by the terms of the contract.

Complicating this is why aren't the lease payments being made. If the company is not paying as a result of fraud, the period would only start to run once the payee knew, or should reasonably have known, that they weren't being paid.

For example, the oil company sends statements to the land owner that nothing is being extracted. Land owner lives five hundred miles away from the property, and never visits it. Despite the statements from the oil company, it is extracting 5,000 gallons a day, starting 1 January 2000. On 1 January 2006, a neighbor lets the land owner know about the extraction. Land owner does nothing.

Land owner goes out to look at the land on 1 January 2010, and sees the pump in operation and then checks his next statement, which says nothing is being pumped. Land owner sues oil company. Statute of limitations in the state and contract limit damages to three years.

Because of the neighbor reporting the information about the pumping to land owner, the land owner would only be allowed to go back three years or until 1 January 2007.

However, if the neighbor did not report the pumping to the land owner, and it appears that the oil company was being fraudulent, then the land owner could go back to 1 January 2000.

But you'd do better if you tell us what the plot needs. We can construct a plausible scenario to make it work.

If this is a real scenario, contact an attorney. There are way too many variables to attempt to provide information based upon the limited facts you're giving us.

Best of luck,

Jim Clark-Dawe

Sea Witch
01-20-2012, 12:01 PM
jclarkdawe thank you, your point is well-taken. This is for a story, not real life.

I want my MC to find some old documents related to a producing well on his property that show that he has not been paid or has been paid the wrong amount (less than he should have) for many years and then have a legal basis to collect.

I am aware of 2 or 3 scenarios in Canada where this would be possible (even though it rarely happens) and 2 or 3 where the person would be limited to collecting what is owed for 3 years back.

So I'm wondering if there are any scenarios like this in the US that would not place a 3 year limit on back amounts owed.

I thought I would ask here because I'm always amazed at the arcane knowledge that many here possess. If I can't get a clear answer, then I can probably dig up some old colleagues who could answer the question.

jclarkdawe
01-21-2012, 01:09 AM
Fraud is always the best way around a statute of limitations issue. But here your original problem is going to be how did the guy forget he'd signed an oil lease.

Two most likely scenarios are that either someone signed the lease and then died, willing it to your MC, or the lease was predominantly written for oil exploration and the MC didn't realize it called for further payments if oil was actually found. But your first hurdle is going to be a legitimate reason why he wasn't expecting oil payments.

Second problem is how come he isn't aware that they're pumping oil. Those pumps are a bit noticeable. Again, you're going to have to come up with a legitimate reason why the MC doesn't know about the oil.

Once you get those two hurdles solved, the non-payment is almost enough to support an allegation of fraud, in and of itself. After all, presumably the oil company knows it is supposed to pay.

My guess is that oil leases are substantially the same in the US as they are in Canada. My further guess is if you rely on something that would work in Canada, it would work in the US. Although the details differ between the US and Canada, much of our laws are very similar.

Best of luck,

Jim Clark-Dawe

Sea Witch
01-21-2012, 01:24 AM
....Two most likely scenarios are that either someone signed the lease and then died, willing it to your MC...

Second problem is how come he isn't aware that they're pumping oil. Those pumps are a bit noticeable. Again, you're going to have to come up with a legitimate reason why the MC doesn't know about the oil....



Thank you very much. Yes, your scenario above is the one I'm using.

I am planning to use a scenario where there has been money coming in, just not the right amount.