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Permalink Reply by Mom A1 on September 1, 2008 at 4:39

I would research the lease first. If there is absolutely NO production, there may be a clause in it showing you that you can request a release after a certain amount of time. Use SONRIS to find out if there has been any production. Verify that against your royalty pay stubs. Try to check and double check everything.

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Permalink Reply by Aubrey C. Sanders, Jr. on September 1, 2008 at 5:34

It is not conclusive that all formations are HBP. It is essential that you review the lease which covers that land. It has always been my policy to have vertical Pugh clause to limit O&G operator to have lease only to certain zones he indicates he wants to develop. Mom A1 advice to check production is excellent idea. Typically if there has been no production for 90 days without any activity to restore production existing lease can be voided, unless primary term of lease is still in effect. But, there can be lot of caveats in Pugh clauses.

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Permalink Reply by Ant on September 1, 2008 at 5:39

Thanks for you comments. What procedure would you recommend to search for existing leases. Would use a geologist, abstract company or certified land agent?

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Permalink Reply by Snake Stewart on September 1, 2008 at 10:42

Get a copy of the lease and it may tell you what you need to know. If not then an attorney or landman would be a good place to start. If they come to lease you there is a better then average chance that you are good to lease.

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Permalink Reply by Meauxmoney on September 1, 2008 at 11:09

I'd like someone to clear something up for me.
Is HBP possible when the lease runs out? Like the primary term of lease is over and the 2 years of extension are drawing down to the last little bit. If something happens on the land then what becomes of the lease? Can one release the land or does HBP bind you to that old lease? Does the O&G re-negotiate a new lease, or can they just claim HBP and not have to sign anthing or give you anything but royalty. Reason I ask is friend of mine bought some land, the primary is almost over, and they are sure to pay for extension. Now, if 2 years passes and they do nothing, he's gonna release but if they come in at the last min and do something, he's been told they could just keep the lease alive from then on. Problem is it wasn't his lease so he has not received anything off of this lease. The company is sure to send the previous owner (who kept 50% of mineral rights until end of primary term) the renewal check for the extension, so that will be before the primary term ends. My friend knows that legally he should get half of that check for the extension,(he owns 50% also) and he's aware that the company has the right to the extension. he's worried about after the second term is up, what happens?

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Permalink Reply by Bobi Carr ("parker") on September 1, 2008 at 11:16

After the 2 years is up, each of them can sign a new lease. That is if there has not been any drilling. Your friend also needs to look at the lease to see if he has to give the Lessor first right of refusal or any other notice.

Your friend and the person who reserved 50% can sign a lease independant of each other.

BOTTOM LINE - After 2 years have the lease reviewed by an oil and gas attorney.

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Permalink Reply by Meauxmoney on September 1, 2008 at 11:20

the previous owner (who kept 50% of mineral rights until end of primary term)
The primary term is now just about over, like, within month or two.
My friend will get 100% of mineral rights after that.
So with new drilling, he will be stuck in the lease that was with previous owner? If no drilling, he will be able to lease to new company.

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Permalink Reply by Bobi Carr ("parker") on September 1, 2008 at 11:24

Sorry I didn't follow.

Usually when someone reserves minerals, it is for 10 years or more with production (or interuption of prescription).

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Permalink Reply by Bobi Carr ("parker") on September 1, 2008 at 11:18

Your friend also needs to send notice to the Lessor. Send them a copy of his deed, so that they will disburse the extension monies properly.

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Permalink Reply by Meauxmoney on September 1, 2008 at 11:22

great idea. I told him not to trust the previous owner to send him his half. There might be one honest person left in this world when it comes to money, but I haven't met him.

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