The treatment of oil and gas leases to bankruptcy will often depend on their treatment under national law. Some jurisdictions are, for example, how a landowner can hold mining rights below the surface or oil and gas rights. These jurisdictions, such as Alabama, Arkansas, Colorado, Michigan, Mississippi, Montana, New Mexico, Ohio, Pennsylvania, Tennessee, Texas and West Virginia, are called Ownership in Place. Other jurisdictions, including California, Illinois, Indiana, Kentucky, Louisiana, New York, Oklahoma and Wyoming, are classified as “non-owner states” and the landowner is not considered the “owner” of the oil and gas rights beneath the surface. Therefore, the landowner cannot “sell” or “sell” royalty shares in oil and gas, but is limited to renting or transferring the exclusive right to search for and produce oil and gas from leased land. In a state of “property in place”, the leasing of oil and gas is not in fact a real lease, but a sale of a simple stake in oil and gas that is the basis of the leased premises. Although the “property states” transfer a royalty through a document (often called a lease agreement), interest is not collected at the time of signing the lease5.5 The taker or gas company is not transferred into payment of quantities from leased premises or land grouped with leased premises until the beginning of drilling and gas production. As a result, the rights of the parties can vary considerably in the context of bankruptcy, even in “property in place” jurisdictions, depending on whether the lessor`s rights over the minerals are or not. The interest of the mortgagor or the beneficiaries of the transfer of the mortgagor to the lease of oil or gas, including a royalty or other payment payable and payable after the date of the enforcement, is transferred to the purchaser of the closed land, to the extent that the safety instrument under which the property was closed prevailed over interest on the lease of oil or gas of the mortga. For example, the court in In re Gasoil, Inc.6, found that an oil and gas lease in Ohio constituted an expired lease for non-residential real estate and the restrictions of 11 United States.
C. However, in In Re J.H. Land – Cattle Co. Inc., the Tribunal found that an oil and gas lease in Kansas was a enforcement contract and could indeed be rejected by the debtor (agent) under section 365 with the authorization of a court. The court held that the oil and gas leasing contract was an interest in personal property (i.e. the oil and gas entry and search license) and not a property real estate interest.7 The Wisconsin and Minnesota courts have ruled that gas leasing is not a real estate lease under national law, The treatment and characterization of an oil and gas lease ultimately determines whether a property right can be asserted and protection provided by p. 365 H, which provides that a debtor/lessor cannot refuse a tenancy agreement and transfer the tenant`s rights to the lease agreement. On the face of it, the proposition that a priority mortgage, when locked, must clear the oil and gas lease seems unassailable. The comment on the Texas Title Standard 15.90 Priority And Subordination Link says, “Once a senior pledge fee is effectively closed, junior pawn rights and junior interests will be extinguished in the same property.” It will be interesting to see how the courts deal with these legal provisions on the ground.