Disagreement over bonus payments for mineral owners

SAN AUGUSTINE, TX (KTRE) - San Augustine has a new kind of downtown tenant. Houston based Crimson Exploration has offices on Columbia Street. It's a base for landmen and women who compete with other companies, like the one across the street, for mineral leases. They start by offering landowners bonus money to induce them into a lease. Some companies pay cash. Others use bank drafts, including Crimson.

Lufkin attorney Rebecca Cousins-Brightwell holds a bank document. "Right here you see this draft is signed. It is signed by an agent of that company representing that they will honor this agreement," she illustrates. It's her evidence in a class action suit she plans to file against Crimson. Brightwell claims Crimson promised landowners $5,000 dollars per acre. After 45 days the draft could be cashed. Landowners, including Gordon Roberts say their windfall never came in. Roberts questions, "Why did they go to the trouble to draw this leases up and then renege on it? That's what I'm wondering."

Brightwell cites other instances, in other places, involving other companies where drafts aren't paid. It's usually along the Haynesville Shale, a geological formation rich in oil and gas.   She also suspects, "There are scams going on right now of sending drafts in the mail." Brightwell advises mineral right owners to have any contract reviewed by an attorney before signing it and above all stay away from bank drafts.

Brightwell is aware contractual terms allow changes following research on titles and mineral rights ownership. Of the thirty people who have contacted her, none say they've received such a letter. Brightwell dismisses the excuse that the bottom has fallen out in oil and gas revenue. "It is natural to believe the economy has something to do with it, but as I see it legally, it is a binding contract," she contends.

Oil and gas exploration companies have quite a presence in small towns where exploration is active. They rent downtown buildings that would otherwise be vacant. They eat at local coffee shops. But disputes like the one in San Augustine make some people want to run them out of town." Roberts said, "You think you've got $35,000 and you wind up getting zero, that's a pretty bitter pill."

Billy K. Lemons is an oil and gas landman sharing his knowledge about the industry at seminars and by writing newsletters to educate landowners about oil and gas leases. You can read his advice at www.resourceanalyt.com

This afternoon, KTRE heard from Steve Schoppe, who is the marketing and legal manager for Crimson Exploration. He says, "We are in ongoing lease negotiations with a number of landowners in San Augustine County. Due to the commercial nature of these negotiations and the competitive environment that exists in the area, it would be inappropriate for us to publicly discuss any details at this time. We do look forward to these talks leading to a mutually beneficial conclusion."

Stay tuned to KTRE, and ktre.com for updates on this story.