HBP Or Not IS The Question

I got a question for you guys on here. Can I be held by production if the old well on the property was capped off and no longer producing back in 2005? I am hoping there might be a way to get out of my old lease and get a signing bonus for a new lease. Anyone have any info on this situation for me?

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Permalink Reply by craig on July 12, 2012 at 3:11pm

Whoever answers will need to know what State the property is in I suspect, as well as some of the language in your lease. My lease specifically states how long a well can be capped and HBP. 

Permalink Reply by Billy Park Whyde on July 12, 2012 at 3:37pm

Some leases state as long as oil and gas is being produced in paying quantities .  You might like to find out who the well was owned by,  The mapping by  BCIS might be very useful to you see http://gomarcellusshale.com/group/ohio/forum/topics/ohio-well-maps also you may want to give consideration to http://www.ohiodnr.com/mineral/orphanwell/tabid/10376/default.aspx as well if your in Ohio. 

Permalink Reply by TM on July 12, 2012 at 3:34pm

I am in Ohio. What is the wording in the lease that would tell me how long? What if my unit was pooled with neighbors back in the 1970's does that change any terms of the lease or not?

Permalink Reply by Dave on July 12, 2012 at 4:09pm

where in ohio and what is the pooling agreement   who is the driller?

does the lease in the first line say all gas and oil from leased property and pooled areas

have you rec'd a check did you cash the check

have you rec'd a 1099 for royaltys?

 

GET A LAWYER versed inO/G rights

0i7okn54zwbdoPermalink Reply by 0i7okn54zwbdo on July 12, 2012 at 4:16pm

Have you been paid a royalty since 2005?

Permalink Reply by TM on July 12, 2012 at 4:25pm

No royalties been paid since then. I will have to get a copy of the old lease and read it. I have been to 3 O & G lawyers already about this and they all give me different answers. None of them have been helpful much to me so far.The well was originally done by East Ohio Gas and was last owned by Enervest and from what I know now was then sold to CNX Energy for these new horizontal Utica wells.

0i7okn54zwbdoPermalink Reply by 0i7okn54zwbdo on July 12, 2012 at 4:37pm

If you haven't been paid in seven years it's not HBP.  An operator cannot simply stop paying you and then, seven years later come claiming ownership of the well and the associated lease.  Read this case:http://www.supremecourtofohio.gov/rod/docs/pdf/5/2008/2008-ohio-595...

That's the ruling from Moore vs. Adams, 2008.  The meat of it is this: no royalty payment means a well must be shut in and a payment must be made.  No payment means forfeiture.  If you've had this well on your property for seven years with zero payment made then it is not HBP per Ohio case law.  

As to your question about being pooled with neighbors I'll again ask, have you received a royalty from such a pooled unit?  Have you received a shut-in fee?  If the answer is no then it is essentially forfeited.  Find a lawyer, have them draft an affidavit of non-production and send it to the operator (now CNX).  

Permalink Reply by Dave on July 12, 2012 at 4:53pm

just a follow up ?

the well was owned by your property and  you have held title for how long before and after it was spudded?

has any of the property been sold -subdivided after the spud/drilled produced or royaltys?

when was the last 1099 tax statement that can be certified with a cleared reciept of funds paid by said producer with proof of production for that period---   that was a $200 @hr ? lawyer question 

Permalink Reply by TM on July 12, 2012 at 4:55pm

 The main problem is this well and land was owned by my grandparents and I dont know all the information that was done in the past and they are both deceased. I do know for a fact the well was capped off and has not produced since 2005. The mineral rights were inherited. I know when they were both alive they were getting royalty checks for the well. The one lawyer did draft a letter to Enervest asking about back royalty payments after their deaths and never heard nothing back from them about it. I think the well was pooled with neighbors because the letter had 2 other neighbors on it for the royalty back payments. I have a feeling Enervest is trying to hide something in all of this.

Permalink Reply by Dave on July 12, 2012 at 5:27pm

how sad sorry

sounds like a old lease some have a storage clause that is up to the lessors disctretion as to what determines storage . It is not always production.

Some lease''s in Pa are held by ONE DOLLAR per year and able to escrowed till payments are $50.00 dollars. 

find a O/G lawyer or lease with someone willing to work with you

 

where in Ohio are you?   

Permalink Reply by TM on July 12, 2012 at 5:29pm

The surface rights were sold in the late 1970's I believe and he retained the mineral rights to the land. Another fact is a royalty check has not ever been cashed since the year 2000. Nobody was alive after that to ever cash a royalty check. I will talk this over with these lawyers again I guess. You would think one of them has been a lawyer for 30 years or more would know these things.

Permalink Reply by Dave on July 12, 2012 at 5:38pm

the oil and gas business has been a game changer and the lawyers that mom and pop trusted have been overwhelmed and chewed up.

some adapted some gave ?advice to the best of there ability

sad but would you go to your dentist about your sore knee kinda what the the last generation did in smallville my father leased for $5.00 acre I got over it and learned

(on that aspect he did get paid)

sucks but can't grind it to dust 

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