What to do when an oil company suspends your interest?
Before an oil and gas company drills a well they generally employ an oil and gas title attorney to render a drilling opinion. A drilling opinion tells the operator of the well who owns an interest in the surface, minerals and leasehold interest in a proposed unit. In addition to detailing who owns the interest, the drilling opinion will also set forth any title requirements that the attorney feels should be satisfied before drilling a well and if successful before paying an interest owner for their share of production. The title requirements are based on the attorney’s understanding of the title from the recorded documents and the legal requirements pursuant to the Oklahoma Title Standards. The operator will then utilize this drilling opinion to obtain leases from the owners of the oil and gas interests in their proposed unit.
In Oklahoma, after the well is drilled the operator then has 6 months from the date of first production to issue you your royalty payment. At this point the operator will again hire an attorney to render a division order title opinion. This is similar to a drilling opinion, but provides for the net revenue interest to be paid to the owner based on the owner’s share of production. If there is an issue concerning somebody’s title this opinion will also advise the operator whether that owner’s interest should be placed in suspense, meaning that interest will be held by the oil company, until such title issue is resolved.
Typically you will receive from the operator a division order which will alert you as to what your division of interest is and notify you of whether your interest has been placed in suspense. If your interest has been placed in suspense they will usually also enclose a copy of the title requirement which contains the issue needing to be resolved prior to release of the suspended funds. Typical issues involve lack of probate, a stipulation of interest is needed, or there is something missing from the record which the operator needs to resolve these issues. If you receive notice that your interest has been placed in suspense you should contact an attorney to discuss the most efficient manner for getting your interest out of suspense and claiming your money. There are often times several different avenues to curing a title defect. Each situation is different and the solution depends on each individual factual situation.