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Duty to Meet Deadlines

Texas oil and gas law has had over one hundred years to determine what important provisions should be contained in an oil and gas lease. While the lease serves as an outline for all oil and gas operations and a contract, there are several implied duties which an oil and gas company must comply with in order to fully act to the best of their abilities. A breach of these duties may lead to a potential cause of action brought by the landowner or royalty interest owner.

The duty to meet deadlines falls within a greater implied duty of the oil and gas company to comply with all administrative and managerial procedures. Oil and gas leases are subject to strict deadlines in the administration of the lease, such as the deadlines in paying royalty payments. Royalty payments are often a condition of an oil and gas lease and require an oil and gas company to pay the owner a share of the mineral product’s worth. This amount can be any amount the two parties agree to and all details, including the date of payment, are outlined throughout the lease.

Owners are also entitled to other types of payments outlined in the lease, such as bonus payments or delay rental payments. A failure to timely pay any of these payments can lead to breach of the duty to meet deadlines and therefore a claim for damages. Oil and gas companies may have multiple leases with different property owners, but need to be held accountable for their managerial lapses. Signing an oil and gas lease does not give an oil and gas company free reign to pay when they choose, but is instead a legal contract that binds the company to pay you at a specific time.

Damages for Failure of a Duty to Meet Deadlines

If an oil and gas company does not meet a deadline to pay royalty interests, the company may be liable for damages. However, it is important to keep in mind that failure to pay a royalty interest on time does not lead to the forfeiture of the lease agreement. Instead, this breach of duty is based in contract law and therefore leads to an action for damages. If you are bringing a claim for breach of the duty to meet a payment deadline, you are entitled to seek damages for the total amount that was lost plus interest.

Malley Law Firm | Houston Oil and Gas Attorney

If you have any questions regarding the duty of oil and gas companies to meet deadlines, do not hesitate to contact the Malley Law Firm. Tony Malley has extensive experience in handling oil and gas disputes, including the breach of implied duties by oil and gas companies. The breach of these duties can lead to long-lasting damages to your royalty interest amounts, and you should be adequately compensated for this negligence. Contact our Beaumont or Houston offices today for your initial free consultation.


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