Lease expiring soon, receiving royalties

I was under the impression once a property owner is receiving royalties, the lease will remain in effect.  That means no resigning the lease and obviously no sign on bonus. 

Now I have a neighbor that says that even though we receive royalties from several wells in our unit and one that actually is drilled directly under our properties, when the lease expires (soon), we will have to resign with the company and will again receive a bonus.  I don't agree.

Who is correct?  This is in NEPA with Cabot.

Thanks!  Marie

Views: 617

▶ Reply to This

Replies to This Discussion

Permalink Reply by cmorris on April 2, 2013 at 9:26am

Once the acreage covered by the lease becomes producing, the lease is HBP until production ceases, so no new lease to sign and no additional bonus.

Permalink Reply by Jim Litwinowicz on April 2, 2013 at 10:02am

The lease will remain in affect as long as you are receiving royalties. If you have a Pugh clause in the lease and not all lands are in production, you may be able to negotiate a new lease for those unproductive lands.

Permalink Reply by Justmeinpa on April 2, 2013 at 10:24am

Thanks Jim.  Our entire property is within the unit, as is my neighbors. Since we are in a very active area with several wells in our unit and more to come, I told them that we will probably not see our lease expire in our lifetime, but they disagree and state that the lease is up in a few months, time for more sign on money. And that is exactly what I thought, as long as we are receiving royalties, the lease remains in effect and will not be resigned, renegotiated and no sign on bonus money received.  

Permalink Reply by Kathleen on April 2, 2013 at 1:49pm
Your neighbors are not the only ones that believe that. I know a bunch of people from a group signing that also believe that. I blame the leaders of that group for this mix up.
I politely ask them to reread their leases if they choose not to believe me that once you are in a unit or start of a unit you are not going to see any more sign on bonus, its now time for the royalty section to come into play for them.
Try explaining it to your neighbors like that, since it seems to help.

RSS

© 2024   Created by Keith Mauck (Site Publisher).   Powered by

Badges  |  Report an Issue  |  Terms of Service