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I am writing to see if any readers have received shut-in payments or has there company said no the well is drilled but we just have not marketed the product yet.

 

Reason being is I have 40 of my acres in a unit and was under the impression that per my lease that after 120 days of the well being drilled I would receive compensation per acre as the lease dictates.

 

Chesapeake says no.  They state the delay in marketing clause that is just before the shut-in clause which states that a well may be drilled but until marketed they have the entire primary term to market the gas/oil with no delay rental payments as it is paid up gas lease.

 

The attorneys I used have multiple clauses ( addendums ) which state that shut in royalty is due " if a well is capable of producing oil or gas within a unit containing any portion of the leasehold premises and is shut-in for a period of greater than 120 days in any calendar year"

The addendums also state at the top that any inconsistencies or conflicts with the provisions in the addendums with the lease shall be controlled by the provisions of the addendums.

 

This matter is more a matter of wanting to understand my lease more so than the 1k they would potentilally owe me ( and lots more for others ).

 

On one hand I believe they need time to market the product yes.  On the other hand I was inclined to think that the shut in fee was to give us land owners a little bit of cash while we were HBP.  As the gas company presents things they can claim a delay in marketing perpetually with no shut in do.

 

So can anyone clarify if there is a true diff between the delay in marketing vs shut-in?  Seems blurred at least on my lease.  My O&G attys said they would get back to me with an answer but perhaps someone has an idea.

 

Thanks in advance!

 

 

 

 

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Just one more part to this.  I think the gas company is saying " we have to produce from the well 1st and then if that production is interrupted it is therefore shut-in".  As I read my addendums it does not stipulate that there be production 1st just that a well has been drilled and is capable of production and that I am in a unit.

You might check your lease to see if the shut-in payment clause says if a well is shut-in "during the primary term" or "after the primary term" the payment must be made.  If your lease hasn't gone past its expiration date and it states "after the primary term" then there's no shut-in payment due.

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