Expert: Alan H. Coogan Date: 5/13/2008 Subject: Oil/Gas lease
Question QUESTION: Mr. Coogan. I just signed a 3 yr./2yr. extension gas and oil lease with Paloma resources on 5/8/8 for $27,000 an acre with 26.5% no fee royalties. The lease was stamped and signed by their supplied notary. A representative of Paloma called me on 5/12/8 to inform me that they made a mistake and will not honor the agreement. They want to change it to $18500 an acre and 25% royalties after production cost. Can they change it on me or can I hold them to the original agreement. I'm sure they haven't filed a record yet due to the short time between signing and the phone call.
ANSWER: Dear Brian:
It is hard to say for sure. First, you do not have to change the lease, but they do not have to drill a well. An important factor of proof is whether you have a copy of the lease. Important details are missinghere. Who else wants this lease?
AHC
---------- FOLLOW-UP ----------
QUESTION: They are already prepping for the drilling of the Barnett Shell in Arlington, TX. Other residents close to me have signed the same lease. I do have a copy of the lease. The landsman for Paloma said they already had 83% of residents signed for $400 to $16000 and acre and that is why they can not honor the lease at the original agreed amount. He says they were never supposed to sign me for that amount because I will be on a different well than those signing for the $27000. Is the lease binding or can they change it since they goofed?
Answer Dear Bryan: If you are serious about this, hire an oil and gas attorney, I do not practice in Texas.
They do not have to drill a well.
In general, under the law of contracts, a mutual mistake may cause an agreement to be voidable, a one sided mistake--no
good luck
AHC
