I've got one of the older leases with Shell. Recently I was contacted because they want to amend the unit size in the lease from 640 to 1280 acres. I'm already in a recorded unit and have received the map. The well pad is completed waiting for the rig to move in. I can't think of a single reason why I would want to agree to this. My neighbor thinks that Shell is trying to gerrymander a lot of existing units together so that they can lock in some of these old leases around us to keep them from expiring. They also want to add a shut-in clause to my lease. Anybody else getting contacted by Shell to do this or any thoughts? One question - would the lack of a shut-in clause in the lease prevent them from shutting-in the well?
"I wasn't aware that a shut-in royalty typically needed paid back."
That isn't the case with a Shell lease (or at least not the older East version that I've seen). The shut-in fee is $5/acre/year, after one year of being shut in (and it doesn't start until the original lease expires); the only purpose of the shut-in fee is to maintain the lease 'in force' with no production.
I have a copy of a 2000 vintage 10-year Phillips $5/2 lease. I don't see anything about a shut-in fee, but the delay rental appears to cover some of the same ground:
"Upon the drilling of a nonproductive oil or gas well on the premises or on any other land pooled or unitized with this lease, or if no royalty is being paid for gas from any other well or wells on the leased premises , lessee may continue to hold the leased premises or unitzed acreage upon the reinstatement of of the payment of the delay rental, hereinbefore provided, until the expiration of the original term of this lease, or until operations are again commenced for drillling a well during the original term of this lease."
The unitization clause also provides for reinstatement of the delay rental on leased land that's excluded if/when the unit is redrawn. 640 acres is mentioned as the maximum unit size.
For sure, I'd have an O/G lawyer check the lease before signing any amendment. I only scanned the lease, but didn't see any language that would let the lessee extend the primary term on leased land that's not included in a unit.