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Permalink Reply by Joe Aldridge on December 22, 2013 at 3:15

I agree. As for as I know no one has challenged either of the wells that LLOG is holding by continuing operations. Those two are the ACME Brick and the Chrumholt that SunnySide leased a block for 6-7 years ago and turned to LLOG. Neither have been very productive. I talked to one land owner recently and he told me he had gotten some royalty payments. Did not tell me how much. But as I said the wells only produce for a day or so and then are shut in. After they shot the well again last week; they left the gate open and I went in and the pressure was 750 lbs and the well was shut in. These people that Sunnyside and LLOG are holding are not the type to go running to an attorney to push anything and nothing at the present is happening in the area so I don't see them pushing this anytime in the near future. Its just one of those situations where you get an operator that takes advantage of the land owners.

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Permalink Reply by Skip Peel - Mineral Consultant on December 22, 2013 at 3:30

Most operators would know their lease rights were vulnerable attempting to use continuing operations as the legal justification in such a case.  I'd suggest to the mineral owners that they hire a law firm well known and respected in the energy industry and have a certified letter sent asking some specific questions.  Not a demand letter as your description of the mineral owners does not indicate that they would be willing to litigate.

Continuing operations can be claimed after expiration of a primary lease term but prior to production being established with some legal precedent.  Of course the time for good faith operations is not indefinite and subject to legal challenge.  A savvy mineral owner or experienced O&G attorney would call the operators bluff in a second in this case. 

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