What happens if an oil and gas company fails to pay royalties?

On behalf of Rock Palermo of Veron, Bice, Palermo & Wilson, LLC posted in Litigation on February 10, 2015.

When an oil and gas company wants to drill for natural resources on your land, they will typically present you with a lease that will not only give the company access to your land for a specified amount of time but will provide you with payments for using your land and the resources taken from it. Called royalties, these payments are can range in size and may continue for a length of time defined by the lease.

Unfortunately, the correct payment of royalties doesn't always occur. Sometimes, oil and gas companies make clerical errors that result in lower payments or missed payments altogether. Sometimes this happens by mistake. Sometimes these errors are intentional. When this happens though, it can leave land owners frustrated and wondering if there is anything they can do to recoup their losses. It can even leave them asking the question we pose in this week's post title:

What happens if an oil and gas company fails to pay royalties?

To answer this question for our Louisiana readers, let's look at a case in Pennsylvania where a class of landowners is seeking payment for royalties the class says they were shorted by the company Energy Corp. of America. According to their complaint, the royalty payments landowners received were decreased by "marketing fees and interstate transportation charges" they claim were "unlawfully applied and taken out of owed royalty payments." Their case is currently seeking the repayment of these charges.

What this case should show our Louisiana readers is that if an oil and gas lease is not honored, litigation may be necessary in order to recoup lost royalty payments. Of course, as our more frequent readers know, the environmental law is incredibly complicated. Most people would not consider it a good idea to tackle such a case on your own. Obtaining a skilled lawyer to help with your case is almost always necessary, especially if you want the best chance at recouping lost royalty payments.

Source: Courthouse News Service, "Oil & Gas Royalty Spat Readies for Trial in PA," Erin Mcauley, Feb. 4, 2015

Tags: Litigation

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