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Permalink Reply by Skip Peel - Mineral Consultant on February 19, 2016 at 13:42

Many companies have gathering contracts that require them to provide minimum volumes or pay a standby fee.  Each company has a certain amount of production required to maintain a level of cash flow.  The companies' internal operating requirements dictate decisions to shut-in production not the type of well, vertical or horizontal CUL.  Even companies headed to bankruptcy must generate enough cash to pay royalty interests, if not they may lose the lease.  So far bankruptcy courts have been cooperative in allowing companies to continue producing and paying royalty.

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