how do we break a lease in WV?

My sister and I have inherited O&G interests in WV.  One of our interests iin Wetzel County has been leased since 1912.  The current operator hasn't paid us anything since 2004, and says there has been no production since they acquired the lease in 2004.  Someone is reporting 5 mcf/month to DEP for the past 2 years, but the accountant at the operator (Waco O&G) says that sometimes people do that to avoid DEP requiring them to plug the well.  We would like to break the lease, so that we can lease it elsewhere.  How do we do that?

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0ym9x5ag7ury2Permalink Reply by 0ym9x5ag7ury2 on October 16, 2014 at 12:58pm

Lisa,

     I've just started investigating how to get a Release from a non paying lease in WV.

I've found that an Affidavit Of Non Production and Non Payment is used in other states and I found a process described for Ohioans.

If I find the form and process required in WV, I'll let you know.

Have you had any success in getting a Release filed in your court house records?   Ron Hale

Permalink Reply by Lisa McKenzie on October 16, 2014 at 2:09pm

In late July, we sent a notice of termination of lease due to non-production/abandonment.  I also sent a copy of the letter to the DEP abandoned wells folks.  After receiving no reply, I phoned Waco earlier this week.  Waco said they consider the lease terminated and I asked for written confirmation.  We'll see what I get.

0ym9x5ag7ury2Permalink Reply by 0ym9x5ag7ury2 on October 17, 2014 at 3:20pm

Lisa,

     Is there a form on line and description of the process?

Like you, we are trying to do this without a lawyer in order to hold costs down.

The Affidavit Of Non Production must not be a process used in WV, so far no one has commented about it.   Thanks  

Permalink Reply by Lisa McKenzie on October 17, 2014 at 4:38pm

Affidavit of Non-Production is something that someone who wants to lease your property will want you to sign.  In it, you state that you haven't received any royalties, etc. for more than 10 years, so that they are confident your property is not held by production.  They will have lawyers do a title search and confirm it as well.

I just wrote a letter that said the lease was terminated because there had been no production for at least 10 years. You can look on the WV DEP web site to confirm the production numbers.

0ym9x5ag7ury2Permalink Reply by 0ym9x5ag7ury2 on October 19, 2014 at 5:38am

Lisa,

    Thanks for the response.

My land has no wells, and the other landowner has a well that isn't producing.

I'll refer him to your response above.

You mentioned "notice of termination of lease due to non-production/abandonment", was this the topic of your letter or did you use a form as part of a process in the WV law books?

There must be some rules or a process for requesting that a Lease in the court house be Released. Is it possible that a letter will do?

Thanks  Ron

Permalink Reply by Lisa McKenzie on October 19, 2014 at 6:10am

That was the topic of my letter.  My lawyer and a company lease administrator have told me that the companies do not normally file a termination of lease document.  Someone doing title work in connection with a transaction will find any leases and verify their status. 

There is probably a process, but if you are asking for a lease to be released, you'll need some reason for the company to give it up.  If they are not producing or paying you under the terms of a lease, you may be able to give notice of its termination due to non-production.  If they are paying you delay rent, then you may not be successful.  We have some 1890's leases where we were getting paid $100/year.  It switched to 1/8 and the amount went down.  We would likely have to sue to terminate those leases.  Haven't gotten into that yet, but the basis for the suit would be that the well was not producing "in paying quantities".

0ym9x5ag7ury2Permalink Reply by 0ym9x5ag7ury2 on October 19, 2014 at 11:37am

Lisa,

    Thanks for the response.

The lease that was on my property signed by the previous owner was a one year lease which terminated and the company sent a letter that said they did not renew but didn't enter a Release in the court house.

A 2nd parcel with a 5 year lease was sold to a group after the original lease was terminated by a Release. Now I have the problem of prying the lease out of several owners hands even though the 5 years has expired. There was a paragraph in the original lease that stated if the owner entered a Release in the court house the lease was no longer valid. I believe the owner of the first lease erred when he put the Release in the courthouse then sold the terminated lease to the next group.

The problem with doing nothing is these O&G Companies will come out of the woodwork trying to sell to a driller when they show up in the county.

The landowner I'm trying to help in the same county has a well that is no longer producing with a lease from the 80s. The oil company doesn't want to let it go.

A friend that has minerals in PA is signing with another company which is going to terminate the 1930s lease using a Well Report that shows the well has been dry for years and is in disrepair. His family has stopped cashing the yearly checks for the past 3 years.

That's similar to what you were saying about the old leases that are not released and the next company that wants to lease will ensure the old lease is terminated.

I have a copy of the Well Report & pictures from PA if you would like to see an example of how a well report can be used to terminate a non producing lease.   

You should stop accepting the checks from those wells that are no longer producing so you can use that fact along with non production to get the lease terminated in the future.

Thanks Lisa.  Ron

Permalink Reply by James Foster on October 20, 2014 at 7:51am

If you lease the land again put the termination letter filed in recorders office as a requirement.  The lease should have specific terms as to what ends the lease non production etc.  And the lease should include language that says the lease must be marked released in recorders office, well status updated on WVDEP, and well plugged and abandoned, land reclaimed, etc.  Some of this may be the law in WV but put it all in lease next time.

Permalink Reply by James Foster on October 20, 2014 at 7:47am

Send them a letter, cc WVDEP and demand they plug and abandon the well, restore any damage done to your property during this process and remove all pipe, tanks etc, update it's status on DEP, and mark the lease as released in the recorder's office if that is what they do in WVa.  Tell them when you want it done by and that you will be contacting your attorney if it is not completed.  They are trying to pull one over on you.  Make sure you don't cash any checks.  Print the production records that show no production from 2004 until recently.  If you know what your are doing and talking about they will probably buckle under and plug and abandon the well and release the lease.  Make sure you are prepared to go to an attorney for the second letter and warning.  It should be around $200 for them to write basically the same letter but you may not need.

0ym9x5ag7ury2Permalink Reply by 0ym9x5ag7ury2 on October 20, 2014 at 11:42am

James,

     Thanks for all the advice. I'll share this with the landowner who has the non producing well, and apply what I need for the leases on my parcels.

Having been stolen from on Buck Well 1H and attempting to warn future royalty owners by getting the word out that theft is more than likely the new norm, doesn't make me a popular person to converse with. There are some who will follow me around and make smart comments, but two things you can be sure of for those folks:

1) They either haven't been stolen from or can't read their royalty statement.

2) They are part of the theft problem and would like to keep it covered up for several years as in PA. That way the theft will be larger than the Landowners of Ohio can recover in a lawsuit.

If I'm wrong, why are all the landowners across the country signing up with McDonald Law Firm to file a One On One Lawsuit with chk?

Is it better to be placed under production quickly and make $65 to $150 an acre per month, or be drilled under later and actually be paid the royalty in your lease, & maybe make a million or two.

Bruce Buck answered that question when he got his first royalty statement by saying "If they aren't going to pay me for what they are taking, they can leave it in the ground". He has yet to be paid for an NGL. chk says his NGLs are BAD. We have a serious problem in Ohio and most of you don't know it yet.

Prove me wrong and I'll give you the $57 per acre I was paid for the first 3 months of production for Feb to Apr 2014 when we were paying $4 per gallon for Propane. I gave away a fortune in propane by not being paid for NGLs.

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