Replies to This Discussion

Permalink Reply by G.H. on January 23, 2016 at 7:33pm

First of all, you still "own" the mineral rights.  You have just leased the right to drill and produce these rights to a company, not transferred actual ownership of the minerals.  But you cannot lease them again until that lease has expired or been released.

From what you described, it seems that at the very least, your mineral rights will remain under lease for the remaining two years on your lease (assuming you have a paid-up lease, because you say you got $60 per acre).  

If you have no Pugh clause, then the 1/8 of an acre that is in the unit will definitely keep your entire lease in effect if that unit is producing.  If it is not producing, then it is possible your lease could be released, but also possible that the well is shut-in, which is a different story.  You state that the well is plugged, but it seems more likely that the well is shut-in.  If the well is shut-in and not plugged, you need to examine your lease for a shut-in clause.  The shut-in clause allows them to hold your lease without production, as long as they make a regular payment to you, usually annually, to maintain the lease.

As for your question, would they open the well again to keep the mineral rights?  Absolutely, if your property and the other properties in the unit are valuable to them.  But if you all have shut-in clauses, then it is very likely that they won't even have to start production again to maintain the leases.

Take a look at this article.  This is an interesting read on shut-in clauses and how they work: http://www.oilgasmonitor.com/shut-in-royalty-clauses-pose-challenge...

• ▶ Reply

Permalink Reply by Tom Driscoll on January 27, 2016 at 1:43am

Thank you, I appreciate your help. 

• ▶ Reply