Navigating El Paso Oil and Gas Royalty Disputes - Common Issues and Solutions

El Paso, Texas, is a popular travel destination, drawing tourists annually to enjoy its outdoor adventure, entertainment, and historic sites. Strategically located in Texas's oil-rich Permian Basin, El Paso is also a hot spot for the oil and gas industry. Many West Texas property owners profit from the area's resources, receiving royalties from oil and gas developers to use their land.

The oil and gas industry generates significant income in Texas, so when royalty disputes arise, they can be costly for land and mineral owners. Our team of El Paso lawyers at Carabin Shaw protects residents' rights, ensuring they receive their fair share of the profits. If you encounter issues with your oil and gas developer, contact one of our English- or Spanish-speaking professionals 24/7 at 800-862-1260 for a free consultation today.

The Railroad Commission of Texas has primary jurisdiction over the state’s oil and gas industry. According to the RRC, Texas land ownership includes surface and mineral estates. The surface estate consists of the land’s surface used for a residence, ranch, or other purpose. The mineral estate is the rights to the resources underneath the surface land. The estates may have a single owner or be split among two owners.

A primary right of land and mineral owners is royalties on the extracted resources. The Texas Natural Resource Code regulates royalty payments and outlines how and when royalties should be paid. Royalties are a percentage of the total revenue from oil and gas sales outlined in the lease agreement between the property owner and developer.

Royalty amounts are not always straightforward, making them a frequent subject of dispute between oil and gas owners and developers. Common disagreements include:

Calculation methods can lead to an oil and gas royalty underpayment. Parties may disagree over whether royalties are based on proceeds received or current market value. Another point of contention may be the production amount allocated for royalties or deductions taken from payments. Some leases also include a minimum royalty provision that ensures mineral owners receive a minimum payment regardless of market value or production volume.

No matter how airtight a lease may appear at signing, different interpretations of the terms can occur. Parties often disagree over definitions of contract terms like “production” or “deductions,” which can significantly impact royalty amounts. Developers can also fail to develop the land as outlined in the lease, leading to reduced royalty payments.

Lease disputes can be highly complex, requiring the expertise and experience of an oil and gas attorney to interpret correctly to protect property owner’s rights and profits.

Oil and gas leases typically specify where a developer can drill. Property owners may be entitled to compensation for damage to the land and the extracted resources if drilling occurs in other areas without proper permission.

Disagreements can also arise over who owns the mineral rights, particularly if there are multiple leases or one owner dies. The possible split between surface land and mineral rights can further muddy the ownership issue. Your Texas lawyer will investigate all leases on the property to determine the rightful owner of the mineral rights and the recipient of royalty payments.

The complexity and high stakes of oil and gas disputes require expertise from an experienced legal team. Oil and gas companies have their own legal professionals to protect their interests. Land and mineral owners require the same to ensure they receive their fair share of royalties as long as wells operate on their property.

The Texas oil and gas attorneys at Carabin Shaw protect property owners from unfair treatment by oil and gas companies, including underpayment of royalties. We offer our services on a contingency-fee-basis, so you don’t pay until we win your case. Our client reviews attest to our ability to protect the investment of land and mineral owners, ensuring they get the profits they are due. Contact us now at 800-862-1260.

For more information:

• RCC Texas
• TLMA