Expired lease

Everyone doesn’t sighn a gas lease on the same day . If one lease expires in the unit that you are in does that cancel the whole unit ?

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Permalink Reply by Thomas Lilli on June 26, 2021 at 10:00am

Usually, you’re not unitized unless the well/s are in production. If you’re in production, your lease is into the production phase. It doesn’t end until production has ended. 

Permalink Reply by william george allison on June 27, 2021 at 11:30am

We are not drilled yet lease expires next may if it expires is the whole pooled unit void?

Permalink Reply by Joe C. on June 28, 2021 at 3:09pm

William, a unit will not void over a lease expiring. Once a operator files a DEP permit and it’s approved and then a DPU is filed in the courthouse, all the drilling operator has to do is start the casing pipe and the unit is in effect and holds all leases. 

Permalink Reply by Joe C. on June 28, 2021 at 4:53pm

Permalink Reply by Joe C. on June 28, 2021 at 4:54pm

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Permalink Reply by william george allison on June 29, 2021 at 12:54am

Ok thanks I can’t see the oil & gas company paying out bonus money 2 times and not drilling time will tell .

Permalink Reply by Thomas Lilli on June 29, 2021 at 1:10am

If you had a capable oil and gas attorney negotiate your lease, most likely he will have spelled out what your situation is. 

What we’ve been told, and have experienced is that the gas companies will plan their activity around the end of the first term so as not to have to pay the bonus again, political issues aside. Being that there is a war on production, that might accelerate their plans….or scuttle them. Scary times right now. 

Permalink Reply by Kyle Nuttall on June 29, 2021 at 3:08am

One expired lease does not a unit cancel.  Here's why.

The oil and gas rights that you own are real property, just like a house or a plot of land.  You can wheel and deal on your piece of property without directly affecting the other pieces of property around you.  If you were the first person to sign a lease, then usually (assuming everyone signs leases with the same primary term) your lease will be the first to expire.  The leases on all the other pieces of property are still in force.  The unit is built on many leases.  The only thing that is likely to happen in this situation is that the company will renew the lease, either using automatic extension language if the lease included that, or by renegotiating a lease with you.  If for some reason your lease were to expire you could probably sue them for trespass, so they are very motivated to make sure your lease does not expire. 

It's very likely that your lease will not expire, though.  Most leases include language (others have posted examples in this thread) that makes it so the lease will not expire if the property is being operated in the search for or production of oil and gas.  The company will argue that putting your property in a unit is operating in the search for oil and gas.  Whether this is the case in your state is a question for an oil and gas attorney from your state.

Permalink Reply by william george allison on June 29, 2021 at 9:22am

Thanks for the good info 

Permalink Reply by Darrell Weaver on July 5, 2021 at 7:35am

Believe it, this happened to me.

At the end of second term Shell surrendered my lease…

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