If you furnish labor or materials to an oil or gas well and are not paid, then you should consider filing a mineral lien. Below are the steps to perfect a mineral lien.
1. Identify the well and the chain of contract.
The best way to identify the well is to determine the API number. The API number is a unique, permanent, numeric identifier given to each well in the United States. Similarly, if you do not have a contract with the operator, then identify each party in the chain of contract, including the operator.
The best time to gather this information is up front by using a job information sheet. If you provide services, then the employee that actually goes out in the field should also be able to note the API number and party information in the file. If you are a supplier, then it is imperative you get this information from your customer before you ship any materials.
2. Identify the lease, legal description of the land, and working interest owners.
This is often the most time consuming task. It may require hiring a landman to pull the necessary documents so that you can compile the chain of title and identify who owns the working interest.
3. Send the notice.
Required or not, it often makes sense to provide notice that you are going to file a lien because it may spark a dialogue and avoid the necessity of filing the lien.
Texas law only requires notices to be sent by those who are “mineral subcontractors.” Mineral subcontractors are those who do not have a direct contract with the “mineral property owner.” “Mineral property owner” means an owner of land, an oil, gas, or other mineral leasehold, an oil or gas pipeline, or an oil or gas pipeline right-of-way.
The notice must identify the amount of the debt; the name of the party you have a contract with; and a description of the land and lease to which the labor or materials were furnished.
You must serve (i.e. mail) the notice at least ten days before you file the lien affidavit. You should send this notice by certified mail, return receipt requested.
4. File the lien affidavit.
The lien affidavit is due six months after you last furnished (i.e., delivered) labor or materials. For example, if you furnished materials on June 1, your lien affidavit is due on December 1. Do not wait until the last day. In rural counties clerks do not always (although they should) record a lien affidavit the same day they receive it.
The lien affidavit must contain:
- name of the mineral property owner;
- your name and mailing address;
- dates of performance or furnishing;
- description of the land, leasehold interest, pipeline, or pipeline right-of-way involved; and
- itemized list of amounts claimed.
If you are a mineral subcontractor, your lien affidavit must also include: (1) the name of the person for whom labor was performed or material was furnished or hauled; and (2) a statement that the subcontractor timely served written notice that the lien is claimed on the property owner or the owner’s agent, representative, or receiver.
5. Send notice of the lien affidavit.
This is not required by the mineral lien statute, however, it is a good practice to notify the parties that the lien has been filed to encourage resolution.
6. File suit.
You must enforce the lien within the same time and in the same manner as a mechanic’s, contractor’s, or materialman’s lien under Chapter 53. This means you must file suit in the county in which the lien is recorded within two years of the deadline to file your lien affidavit.