Flat rate leases?

Understanding the laws in West Virginia on production related to flat rate leases and that no production needs to occur to hold the old lease when a flat rate has been negotiated. Also that West Virginia law has abolished flat rate leases going forward. That being said what is your opinion on production issues related to old leases that have the gas at a flat rate per well and the oil at a 1/8th royalty.

Here are a few questions to get the conversation going. Is this type of old lease considered flat rate completely? Does the oil and gas company have to produce oil in paying quantities as well as gas to keep the lease whole? If there are multiple years of consecutive lack of production of both oil and gas how would this affect the lease?         

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Permalink Reply by wyalusing jim on January 2, 2016 at 9:29am

as always, the answer to your question will be found in your lease.

I am pretty sure that flat rate leases are normally held by production...actual production. look for the words "for as long as production in paying quantities....."

but of course there can be other language in there such as "for so long as ......payment is made annually" or something like that. that would pretty much screw ya if those payments have been made timely.

wj

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