The Oklahoma Oil and Gas Well Lien

10 Things You Should Know

1. When must I file the lien?
File it within one hundred and eighty (180) days after the date that material or supplies were last furnished or labor last performed. The one hundred and eighty (180) days includes weekends and holidays. Many companies invoice after the labor or material were furnished. Beware! Remember to use the last date that the work was performed or material supplied rather than the invoice date.

2. Who can file the lien?
Any person or company that furnishes labor, material, machinery, or supplies used in the digging, drilling, completing, operating or repairing of an oil well, gas well, or pipeline. Both contractors and subcontractors can use it. If you have an MSA with the debtor that has a “you can’t file a lien” clause, then call a lawyer.

3. What information must be included on the lien?
A lien must include: (1) a statement setting forth the amount claimed and identifying the material or labor supplied; (2) the name of the owner or owners of the leasehold; (3) the name of the debtor; (4) the name of the lien claimant; (5) the description of the property subject to the lien; and (6) a verification of the lien by affidavit. You should attach invoices or other itemized statements setting forth the amount claimed. Require your field hands to write the lease name and legal description on each work order. Otherwise, you’ll have headaches down the road.

4. Where do I file the lien?
The lien must be filed with the county clerk of the county in which the oil or gas well is located. The county clerk mails a certified copy of the lien to the debtor. Check with the county clerk to ensure that the debtor accepted the certified mail. If not, you need to send a process server.

5. After I file the lien, what’s next?

The oil and gas purchasers will suspend payments up to the amount of your claim if you mail them a certified letter and include a copy of the recorded lien. Suspending production is powerful!

If the debtor doesn’t cry “uncle,” then you need to foreclose the lien within one (1) year of recording it.

6. Is my lien superior to other liens and mortgages?
If others hold valid Oil and Gas Well Liens, then they stand in equal status to you. In other words, the lien claimant who provided services at the end of a well project will be equal in priority to the lien claimant who provided services at the beginning of the well project. Your lien refers back and applies from the date the first labor or material is furnished to the lease. So, if the drilling was started prior to the recording of a mortgage, then the lien is superior to that of the mortgagee.

7. What if the debtor has a counterclaim?
Sometimes the debtor has a valid reason for not paying the invoices right? In such case, it can post a bond with the county clerk in an amount equal to 125% of the lien amount.

8. What if I already filed but made a mistake on the lien?
You cannot amend the lien for the amount claimed. So check and double-check the numbers before you file it. However, the courts will allow you to change the other information.

9. Can I file a lien and still preserve a relationship with the client?
Oklahoma law doesn’t require it, but I always recommend a Pre-lien letter. Sometimes a letter from a lawyer will do the trick.

Also, you can implement half measures that preserve your lien rights, yet still provide some breathing room for your customer. For example, perhaps you file the lien and agree with the debtor not to suspend funds provided it pays off the debt within ninety (90) days.

10. How do I recover attorneys’ fees, interest and filing costs?
The majority of liens are resolved without the need for trial. Your attorney will ask for his/her fees, interest and costs in the negotiations, and if you have a strong case, chances are you will get them.

Gary David Quinnett, PLLC, (405) 312-1331, Gary@GQ-law.com

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On August 27, 2013, Gary Quinnett presented a legal seminar on commercial real estate issues. The attendees rated him "Excellent"