Archives for August 2018

Monitoring Your Royalties & Lease Compliance

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Do you fully understand your oil and gas lease and what you are owed? With oil prices dropping, some oil and gas companies have fallen short on paying royalties that are owed. The ripple effect has caused class action suits to emerge.

How can you protect yourself?

At Sweat Law Offices, we recommend a few strategies related to monitoring your lease compliance. Land and mineral owners face a constant battle to ensure lessees are complying with their oil and gas leases.

  • Understand what you are owed. Are the royalties being calculated accurately? Your check stub should include certain information such as codes that indicate the product, type, etc. Get familiar with these terms so you know how to read your checks.
  • Know the terms of your lease. It sounds simple, right? But many landowners do not understand how their royalties are calculated and paid especially based on term, production, and compliance.
  • Monitor production activities. In some cases, a lessee is contractually bound to notify you of their actions. Not always. You will need to know when a well is completed and production has ended.
  • Is a royalty audit necessary? Audits are expensive, depending on the terms of the lease, how many wells, and the complexity of the lessee’s internal operations. But they do identify large underpayment issues.
  • Has production stopped? Is the lease still in effect? How does a gap in production affect the terms of your lease?
  • Has there been a spill or leak? Have these spills or leaks been reported, remedied, and cleaned up? How does this affect your lease
  • Consider consolidating funds to pay for an audit on property that is affected by multiple parties.

Not sure where to begin?

Reach out to Sweat Law Offices today to find out how we can help you monitor you royalties and lease compliance. It’s a complicated process for sure, but we have the proven ability to help landowners protect their mineral, oil, and gas rights.

Has my Oil and Gas Lease Expired?

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Do you know if your oil and gas lease is about to expire or has expired? Often, the answer is unclear. In fact, many landowners are surprised to learn that according to standard oil and gas leases, the contract is not terminated even when a lessee fails to pay them royalties.

If you are currently under contract, and the production has ceased, you may find yourself in the situation where you’d like to terminate your oil and gas lease. This is where an oil and gas attorney is beneficial.

Work with a trusted, experienced oil and gas attorney at Sweat Law Offices

Here at Sweat Law Offices, we will review your lease to determine whether it has terminated and what you are owed.

In some cases, landowners negotiate upfront that a lease is automatically terminated if royalties are not paid within so many days after the first production. Often though exploration companies are resistant to agree to such terms because it puts them at risk. But the last thing you want is to have to sue for unpaid royalties.

At Sweat Law Offices, we have been helping protect landowners with carefully drafted termination clauses and contract negotiation.

Examples of how our oil and gas attorneys can help you:

  • If you’re in the initial contract phase, we can suggest the addition of clauses that provide provisions with your best interests in mind. For example, prior to the end of a primary term, a clause may allow an oil and gas lease to be extended for another term of equal length to the primary term upon payment of a bonus (equivalent to the bonus the landowner was paid when they signed the lease).
  • We will review your contract and explain to you the status of your lease—whether it has expired or extended into its secondary term, for example.
  • What happens when your primary term ends? The lease does not automatically expire or terminate. Certain provisions may cause your lease to extend—it’s important to know if this has happened.
  • We will identify key language in your contract that triggers a secondary term and extends your lease.
  • We will review all provisions in your lease that affect the length of the lease. For example, when an oil and gas well is “shut-in” because of a lack of market or transportation, the lease may be extended during that time. Other examples involve natural disasters, strikes, etc.

Have a question about whether your lease has expired, is about to expire, or has terminated? Consult with the oil and gas attorneys at Sweat Law Offices today.

7 Things you need to Legally do When Starting a Business

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Before starting a business, you need to ensure that your business strategy meets the legal requirements of the industry. The success of your business relies on having the proper legal matters in order, so it is essential to take the proper steps to ensure you start your business lawfully and remain protected. In this article, we provide you with seven steps you should take to make sure your business is operating legally.

1. File All Necessary Originating Documents

For almost all businesses, specific legal documents need to be filed to begin business operations. For example, if you plan to operate as a corporation, you need to file articles of incorporation. If you plan to run as an LLC, you would need to submit articles of organization to begin operations. This step of registering your business is simple and won’t take up much of your time, but it is crucial to starting your business legally.

2. Obtain all Licenses and Permits Needed

Many companies across all industries require a license or permit to operate. These permits can be issued at the local, state, or federal level. It is important to thoroughly research the requirements for your business to find out which licenses and permits you need to obtain. Be sure to consider the amount of time it will take to obtain these licenses or permits. Getting all the legal requirements squared away can take time, so be sure to plan ahead.

3. Keep Your Financials in Order

Be sure to open all bank accounts and credit lines in the name of your business, keeping them separate from your own personal bank account. If you don’t keep them separate, it could result in a court not viewing your business as a separate entity, leaving you personally responsible for lawsuits or debts brought against your company.

4. Get Insurance

Certain types of insurance, such as auto insurance or workers’ compensation insurance, are required by law to operate your business. Other types of insurance like general liability and property insurance are also good to have to further protect your business.

5. Protect Your Intellectual Property

Intellectual property is referred to as intangible creations of the mind. This includes company logos, symbols as well as names and images used for commerce. Every business has a type of intellectual property that needs to be protected. Whether it is your special process for making your product or simply your company logo, you should take these specific steps to keep your intellectual property protected:

  • Copyright- Protects written and artistic content
  • Trademark- Protects logos and business slogans
  • Patent- Protects inventions

Taking the steps to obtain these for your intellectual property will help protect your business and ideas from being misappropriated by others.

6. Budget More for Legal Spending

Legal fees can be a large investment upfront when starting your business, so it is important to ensure you budget for more than you think you’ll need to help offset any unexpected costs that could arise. You don’t want to short yourself on legal funds and be forced to dip into funding meant for other important business objectives. Consult with your attorney to get an estimate of the total legal fees when you begin the process of setting up your business.

7. Find the Right Attorney

Hiring the right attorney to help you in the process of starting your business is crucial and will help to save you precious time and money in the long run. Sweat Law has extensive experience representing corporations and business entities of all sizes across a wide range of industries. With specializations in entity planning and intellectual property, Sweat Law serves as a comprehensive resource to help businesses get started on the right track.

Contact Sweat Law today to learn more about how we can help you start your business. The process of starting a new business can be daunting and complicated, so we are here to help you navigate through the process, offering unparalleled legal advice and practical solutions to help ensure you have all the required pieces in place to begin operating your business.

Should I Sell my Mineral Rights?

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Selling your mineral rights is an appealing idea, but how do you know if you should? If you are a landowner, the idea of selling your mineral rights may have crossed your mind and these days, with the prices for minerals steadily increasing, it may be a good time to consider doing so.

Are you interested in selling some or all your interests? Maybe you want to diversify your assets. Pay for college. Prepare for retirement. Pay off debt.

You’re not alone.

Many mineral rights holders do not have the sentimental attachment to the land, as today’s estates have already been divided among heirs. Leasing of minerals has made exploration more attractive to companies. Some believe that mineral values are at an all-time high—predicting that the future will see a decline in the dependence on hydrocarbons.

If you are considering selling your mineral rights to an oil and gas company, it is important to understand what your options are. You may think your only option is to sell all your rights at once, but that is not the case. You have the option to sell only a portion of your rights and retain the remainder of your mineral rights to pass on to your children or sell later depending on what your needs are.

Are you interested in learning more about selling your mineral rights?

When? How? Here are a few questions you’ll need answers to:

  • What is the value of your minerals?
  • What is the leasing activity like in your area?
  • Are new wells being drilled? Have they been successful?

And once you’ve decided to move forward:

  • How can you get the best price for your mineral rights?
  • How long does the mineral sale process take?
  • Where do you go to put together a contract?
  • Do you need a warrant title? How do you know what interest you own?

Let’s work together

Reach out to the experienced oil and gas attorneys at Sweat Law Offices today to learn more about mineral rights and how to put your best foot forward in making your next steps.