Replies to This Discussion

Permalink Reply by Skip Peel - Mineral Consultant on October 4, 2010 at 15:18

Denise, does your lease define "operations"? Although I know a little about this subject, I have no idea what you mean by "a surface conductor and rat hole". You should also state whether your minerals are in LA. or TX. if you desire an accurate answer.

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Permalink Reply by adubu on October 4, 2010 at 15:48

most leases defind operation as activity to produce the minerals and therefore require drilling to begin ie the well must be spud (the drill bit hitting the ground rotating to make hole) Preparation of drill site,pad, rat holes,etc is not operations to hold lease. Spud must occur before midnight on day of expiration of lease. But as Skip said read your lease for definition of "operations"

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Permalink Reply by The_Baron on October 5, 2010 at 2:58

Actually most standard lease forms do not define operations.

I have seen many times leases held by contiuous operations prior to spud. Of course without a specific definition, of which many leases do not have, it would be up to a court to decide.

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Permalink Reply by P.G. on October 5, 2010 at 4:10

I wonder if running a gathering line into a section could be considered activity?

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Permalink Reply by The_Baron on October 5, 2010 at 5:11

It would all depend on your lease and specific situation.

For example, many leases are held past the primary term when a succesful well has been drilled, and there are contiuous operations to bring that well online.

If there is a well drilled, and they are working diligently to build a gathering line, it may be enough to hold the lease. As I said above, it owuld depend on your lease. Personally, If it was my well, I would probally pay some shut-ins just to be sure and keep everyone happy. Just because you are in the right doesn't mean you want to litigate.

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Permalink Reply by P.G. on October 5, 2010 at 5:45

I'll have to look at my lease but there is no well, just a new 12 inch pipe that was run into our section and capped off. I believe they said that line is what multiple wells along it's path would be tying into.. The pipe runs across several sections

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Permalink Reply by Dion Warr, CPL on October 7, 2010 at 4:23

P. G.:

That is generally not enough to hold a lease.

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Permalink Reply by P.G. on October 7, 2010 at 4:43

Yes, a pipe without a well is kind of useless. Seem like that would be a stretch to claim it as operations for production.
I've looked at my lease and can't find "Spud" anywhere in it.

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Permalink Reply by The_Baron on October 7, 2010 at 5:15

I would agree with Dion, if it is not going to a specifice well in your unit I would not consider that operations under a lease. I say this because until there is a well capable of production, the pipeline is not acting in the benifit of your minerals.

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Permalink Reply by P.G. on October 7, 2010 at 5:25

I'm hoping they will let my lease expire! After Gohaynesvilleshale came in to being, I feel nauseous every time I look at that lease..

Permalink Reply by L D H on October 5, 2010 at 5:47

Adubu, Thank you so much for this clear definition of "spud". I have tried to google it in the past, but never got such a good answer. GHS is a great site.

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Permalink Reply by adubu on October 5, 2010 at 9:34

L D H 3 --- Thx for kind words--This is great site for info and education and I learn something almost every day

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