I was just wondering if any one knows how long we can be locked in with the shut in royalties, Guess I am asking if they can just give me a small check at the end of every year till prices go up. There is a well ,but they are not producing it and with the lease coming due they have me locked in with shut in royalties.
Read your lease... hopefully that can shed some light on it for you.
Just by reading the lease it looks like it could go on forever as long as they pay the shut in royalties , Looks like I may need a good lawyer.
The answer to your question is an unequivocal - it depends.
It depends on the language in the lease.
Some lease language set a time limit to shut in periods and
Other leases have no such time limits.
Since I have not seen your lease it's difficult to give a definitive answer.
Is there a time limit in your lease.
As to the second part of your question; shut in payments may extend the Primary Term
and therefore your lease may not be "coming due".
What does the lease language state?
Barry It says on shut-in-royalty shall have the same force and effect as production obtained from the premises under paragraph 2. Paragraph 2 reads- To have and to hold said premises for the purpose aforesaid during the term of 5 years from the primary term date ,and as long thereafter as drilling or reworking operations for oil and gas are conducted thereon as hereinafter provided, or oil or gas is gas is produced in paying quantities therefrom, or this lease is extended by any subsequent provision hereof.
In other words, the lease remains in force.
Also, sometimes in the shut in clause a time limit is stated. If no time limit is stated the company could, theoretically, keep the well shut in indefinitely. Although, I doubt this will be the situation in your case.
That is the way I understand it also, There is another company wanting to top lease but not sure how that will work out with being shut in, Thanks for the info, it all helps .
Yours is a good point.
However, this part of the code may not apply to lease language that contains a shut-in clause.
Kathi That is exactly what is going on with mine , a shallow well was drilled and never put in production they are using it to keep me shut in, my property is all in WV
Wish you had shared this info earlier.
Drilling a well and not producing the well may not fulfill the terms of the lease.
Has the company said why the well isn't in production?
Barry The reason they gave me was that prices are to low at this point and it has been this way for 10 months .