Help! Held by production from a lease signed in 1973?

We signed a lease with shell on 11/08/2012 for 19.79 acres. We are supposedly an add-on to a unit. They sought us out for the lease!! Now they are saying that Vista holds our property from a lease my grandfather signed in 1973 for his 277 acres and this was in a pool of 3 other properties adjacent to me.

2 things about this are confusing me:
1. This property has always been on a separate parcel id. My dad acquired it in the 50's. (my dad traded his uncle 18 bred heifers for the property, but my dad was a teenager so it is possible that it was transferred in my grandpas name). So how is it even tied to my grandfathers parcel? The property was Transferred to us in 2004.

2. My grandfathers 277 acres were subdivided in 1989 when my dad sold it and the people owning those parcels are all leased differently, one is held by production from a vista well from 2010. One just signed with hilcorp and the third SAID he is leasing with shell also. So how were they able to lease again?

We leased with Vista in 2008 and were never drilled on so we were released in 2011. Man from Vista says we are not tied to them at all from what he can tell. Shell tells us that the burden is on us to prove we are not held by Vista. Vista is willing to release us but doesn't understand where the problem lies.

Another factor....We also own my father's farm nearby he purchased in 1969, which is also held by production from a 2010 well.....but, again, it was also always on another parcel Id. But I guess all 3 properties were once owned by my dad.....is that a factor??

My question is...... Is shell playing a game here? If they truly wanted us leased wouldn't they be trying harder to solve this conundrum? They have the pad, the road paved and are ready to drill. Hmmmmmm?

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Permalink Reply by Willi West on March 2, 2013 at 12:56am

OK--so, I guess, that your parcel was part of the lease signed in 1973, it was all unitized, and thus you are HBP by this older well which is now owned by Chesapeake.  Sounds like that's the end of the story.

On a side issue--your OP asked how neighbors could sign new leases, on pieces of what was your grandfather's farm.  It's pretty common for a lease to be written and even recorded when, later, it is found to be invalid.  Almost always this is discovered before any actual site work begins.

Permalink Reply by Gas heir on March 2, 2013 at 1:28am
Yes, there was a vista well drilled last year on part of that farm that was in this old pool. So, that one is not my problem but I bet it's getting interesting over there! Cause like I said....vista signed a new lease with us 2008. Even staked out a shallow well, but never drilled it so they must not have seen this 1973 thing.

We have a separate property from this mess that is actually "held by production" it was drilled in 2010. I wonder if the title on that farm was rearched properly. I heard from the landman from long consulting that they are finding all kinds of title problems from these shallow wells and it is holding up drilling.

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