The purpose of an oil and gas lease is to allow a property owner to generate revenue by leasing their mineral rights to a business. When the lease proceeds with minimal issues, the arrangement can be beneficial for everyone involved.
Unfortunately, sometimes property owners with oil and gas leases find themselves facing suspended funds, meaning they do not receive payments as promised in the initial lease documents. Understanding the most common causes of suspended funds can help property owners recognize when they may need support correcting issues to receive the payments they deserve.
1. Title disputes
Occasionally, oil and gas companies or property owners negotiating releases do not do adequate title research. There may then be questions regarding the ownership of the property or who actually holds mineral rights for the land. The company with the lease may suspend payment until the resolution of the title dispute.
2. Substandard production
Domestic oil and gas wells produce millions of barrels daily. However, production rates at individual properties vary drastically. If the production at a property is far lower than the oil and gas company anticipated, a reduction or delay in payment could occur.
3. Address changes
Holding mineral rights for property does not necessarily mean that an individual lives there. Suspended funds could be the result of confusion regarding an individual’s living or mailing address. The company may have issued a payment, but the mineral rights holder may not have received the check as promised.
Partnering with an experienced attorney can help those who own mineral rights address suspended funds and ensure that their oil and gas leases remain profitable. Property owners who have not received payments as outlined in their leases may need assistance holding oil and gas companies accountable.