Replies to This Discussion

Permalink Reply by Brian Day on February 24, 2012 at 9:13am

Interesting term.  Did you recieve a "shut in" fee in the past?  I wonder, does inactive mean no-producing?

Permalink Reply by Lynn Wigglesworth on February 24, 2012 at 10:11am

The way I read the lease, the 'shut-in' fee doesn't start until 12 months after the primary term of the lease ends. So you wait the 5 years of the lease, then an additional 12 months before you get a shut-in fee. Some of the original leases of properties in that unit are probably up, so they may be getting shut-in fees ($5/acre/year).

Permalink Reply by paleface on February 24, 2012 at 12:56pm

 The well has to be a producing well and the lessee is unable to .market the production

Permalink Reply by Lynn Wigglesworth on February 24, 2012 at 1:21pm

The SWEPI lease says: "If after the primary term of this lease, all wells on the leased premises or within a unit that includes all or a part of the leased premises, are shut-in, suspended or otherwise not producing for any reason whatsoever for a period of twelve (12) consecutive months, and there is no current production of oil and gas or operations on said leased premises sufficient to keep this lease in force and this lease is not otherwise kept in force by other provisions of this lease, Lessee may maintain this lease in effect by rendering to Lessor as shut-in royalty, a sum  equal to five dollars ($5.00) per acre."

Permalink Reply by paleface on February 24, 2012 at 1:30pm

 Lynn that sounds like an infinite lease extension for five dollars an acre ?

Permalink Reply by Brian V. on February 24, 2012 at 2:23pm

It does sound infinite. It is basically saying that as long as a unit is in place and operation in any way shape or form have been suspended they can take as much time as they would like to "get back to the OPERATIONS". Operations of course are never clearly defined or made specific.

 

I was always under the impression that in order to shut-in a well it has to be capable of production. This well in its current state may be capable of production but they obviously changed the intent of this unit to being a Marcellus well when they filed the most recent declaration and permits. I think all it would take is for someone within the unit to challenge the shut-in or inactive claim and you would see Shell move this up it's priority list. They obviously have intensions for this well. They just don't have specific motivations if they are not held by law or contract to any supposed requirements as an operator.

Permalink Reply by Boni Moreland on May 26, 2012 at 11:22am

I have a SWEPI lease and there is no mention of this in it. However, they did try to sneak in a resign at $5.00 an acre if the lease ran out.

Permalink Reply by Lynn Wigglesworth on May 30, 2012 at 8:34am

A SWEPI lease without a shut-in clause?

Permalink Reply by paleface on February 24, 2012 at 10:02am

 The way I understand being declared inactive its the start of the time clock for the operator to progress with the well or close it down,there is a time limit once that is declared?

Permalink Reply by Lynn Wigglesworth on February 24, 2012 at 1:26pm

Are there any time limits at all on wells, beyond those in the lease? The Kennedy well was drilled 4 or 5 years ago and nothing has been done since.  I assumed the 'inactive' status was just a way to get around the impact fee until they do something with the well.

Permalink Reply by Lynn Wigglesworth on February 24, 2012 at 10:03am

I don't get it. The Butler well is listed as 'active' in the production report, but it's not producing...how can it if it isn't on a pipeline? Maybe 'inactive' means that they don't plan to do anything with it for now? The 3D survey is still going on; I saw their 'drill buggy' for drilling shot holes across the street last weekend, and the helicopter is flying around dangling equipment all the time. BTW there is a really bright light to the west of me; saw it for the first time last night. That usually indicates a drilling rig. I'll drive around this weekend and see if I can find it.

Permalink Reply by Terry James Erway on February 25, 2012 at 8:21am

The Butler well is now producing.It went to active status in either the last couple of days in Dec. or Jan, 1. We have not been contacted by Shell yet but from what I understand it is three months until royalty checks start coming. I know it is hooked up and is running, you only need to go by it to recognize it.

Production reports are always months behind in reporting.

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