Replies to This Discussion

Permalink Reply by KG on October 13, 2011 at 2:38pm

That is some pretty scary stuff - just the fact that the second they "break ground", in any way, shape, or form, you are locked into your same crappy terms as before - indefinitely. Thank you for your help! I really have to do some heavy reading and researching!

Permalink Reply by Lynn Wigglesworth on October 14, 2011 at 7:57am

There are a LOT of people in that position. East (then Shell) scrambled to get all of the leased property that they could into units before the leases expired. Very few of those units are actually producing anything yet, but those people are locked in with no more money until the gas starts flowing, then they get whatever royalty they signed for. I guess if you have a 'rental' lease, you still get your annual rental payment? Many people signed for up-front bonus, so get nothing once they are in a unit, even if it takes years before the gas starts to flow.

Permalink Reply by Brian Day on October 14, 2011 at 1:55pm

Say, if they don't have a well drilled in the unit that you are included in and did not have a well drilled in that unit before your lease was due to expire, I think they may have laid claim to your land with no legs to stand on it.  Now you probably should have notified them 90 days previous to the expiration date that you wanted more money or the right to lease with someone else.  Neglecting to do this may be their defense.  It depends on what your lease says.  As for getting any bonus money owed you, a lady named Andrea Garrity works for Shell and can probably get that straightened out for you.  i had her e-mail and address somewhere.  I know that I gave it to Lynn Wigglisworth, so she might have it.  Now accepting this payment may lock you in with no opportunity to contest whether or not they had a right to extend your lease on the sketchy basis of a pipeline across someone else's property.  Pull that lease out and read ALL OF IT very carefully.  Good Luck.

Permalink Reply by Brian V. on October 14, 2011 at 2:52pm

I saw somewhere that a driller needs to only break ground or even place a mailbox at a drilling site to HBP land.

Permalink Reply by Finnbear on October 14, 2011 at 5:16pm

It all depends on what the lease defines as "production". A good lease will require minimum of a rig in place with a bit in the ground. A bad lease might only require "site preparation" which could be as little as a culvert at the road and a dump truck load of gravel. This is why it is foolish to sign a lease where you don't know and understand all the things that are contained in that lease. Once you sign it, you own it, good, bad, or otherwise.

Permalink Reply by Ann Ticopa on October 14, 2011 at 7:31pm

A copy of a 2005 Fortuna lease has "in search of" [o/g] in their laundry list of reasons to hold a lease past 5 years.  That would seem to include seismic.  It also mentions "market conditions" under the force majeure term.  My "rule of thumb" was that if a company wouldn't consider a 3-year term and/or a Pugh, the talk about wells/pipelines going in right away was probably just bluster.

Permalink Reply by Lynn Wigglesworth on October 15, 2011 at 1:27am

East's 2009 lease lists "drilling, completing, reworking, equipping, or any other operation calculated to obtain production..." That's kind of open-ended and can include whatever they want it to include to hold by production.

Being in a unit, even if it isn't producing yet, is still  progress for both the gas co and the landowner.

Permalink Reply by KG on October 15, 2011 at 2:14am

Thanks Brian. I have to read over the lease again with a fine toothed comb. I'll bet it has to do with us not contacted them in the required time period.

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