Joint Operating Agreements: Mechanic's Liens; Joint Interest Billings

摘要

Klima is the operator of a unit. It sues the defendants who are non-operating working interest owners in the unit for failure to pay their joint interest billings. Klima also seeks to foreclose on mechanic's liens against the defendants through the filing of a Statement of Lien with the county clerk's office. After filing the lien, the proceeds of the sale of the crude oilfrom the unit attributable to Hurley's interest have been put in suspense. Hurley argues that Kan. Stat Ann. § 55-207 does not allow Klima to enforce a mechanic's lien against a portion of the oil and gas leasehold estate nor should § 55-207 apply since Hurley has done no work on the lease for which the lien will attach. The language of § 55-207 refers to the creation of a lien "upon the whole of such leasehold." Since Hurley only owns a small fractional share of the lease that is committed to the unit, he argues that the lien cannot attach to that fractional share. The court rejects Hurley's interpretation of § 55-207 which would require Klima to file a lien against its own leasehold interest for the payment of Hurley's debt. In looking at the entirety of the Kansas mechanic's lien statute, the court concludes that its purpose is to provide a remedy for creditors in the circumstance where a debt is owed pursuant to activities taking place on an oil and gas lease. Thus, the lien perfected by Klima is valid and may be foreclosed. The court also rejects limiting the mechanic's lien statute to circumstances where a party has provided services relating to oil and gas operations. In this case, the joint operating agreement provides that non-operating working interest owners promise to pay joint interest billings for the operation of the unit That is sufficient to come under the statute.