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Underpayment of Royalties

The oil and gas industry is alive and well throughout the state of Texas and seems to expand every day. As such, new oil and gas lease agreements are signed and documented each day, detailing the provisions between an oil and gas company and a landowner or royalty interest owner. These lease agreements serve the same role as any other business contract, including the addition of implied duties on the part of an oil and gas company. One of these important duties is the payment of royalties. If you believe an oil and gas company has underpaid the proper royalties, seek the assistance of an experienced oil and gas attorney.

Royalty Interests

Upon drafting an oil and gas lease, the lessor may grant the minerals underneath the land to someone else or may reserve the right to keep mineral rights. A mineral interest is different than a royalty interest in that a mineral interest involves the ownership of all rights to the minerals, including such items as delay rental payments, royalty interest, and the right to lease. A royalty interest holder, on the other hand, only has the right to receive the royalty interest and not the right to delay rental payments or any bonus amounts. Royalty interests are often subdivided a number of times, so that if you are a co-owner of an oil and gas lease, you may only see a small fraction of the total amount of minerals produced. However, this does not mean that an oil and gas company can pay you a smaller amount than you are entitled to and instead means that an oil and gas company must properly administer and manage the mineral interests at question.

Unfortunately, the underpayment of royalties is a prevalent problem within the oil and gas company, often due to the administration of many different royalty owners. However, this is no excuse for the underpayment of royalties, and you may have a claim against an oil and gas company if they have underpaid you any amount of royalties. Oil and gas companies have a duty to accurately administer and manage the lease, which involves the precise payment of royalties. Any damages stemming from failure to pay the correct royalty amount will include the royalty amount plus any interest for the period in question.

Malley Law Firm | Houston Oil and Gas Attorney

If you are unsure whether an oil and gas company has underpaid any oil and gas royalties to you, do not hesitate to contact the Malley Law Firm. Tony Malley has years of experience in handling oil and gas lease disputes and questions. Oil and gas leases involve a thorough understanding of Texas contract and property law, and a unique knowledge of the subset of both subjects within the oil and gas industry. Tony Malley understands that royalties should be paid on time and in the full amount, and will fight to ensure that your payments are accurate. Contact our Beaumont or Houston office today for your initial free consultation.


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