Sould I notify gas co. that lease is about to expire?

I have 80 acres in a section that is currently under lease until March  2012 with one co. The gas co. drilling the well is different fronm the one I leased with. They built a pad and are going to drill the first of the year (2012). I think I should  keep quite then either go UMI or renegotiate the lease if my co. doesn't extend the lease... any thoughts??

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Permalink Reply by j garrett on September 12, 2011 at 15:25
You are probably HBP'd.  Who is drilling and who did you lease with?  They are not usually the same.  The company doing the drilling was probably hired by the company you leased with, thereby holding your lease.
Permalink Reply by Jed Clampett Bn2 on September 12, 2011 at 16:09
Leased with Hwk, but Chesapeake is the one drilling. Hwk wanted my minerals in the next section but I held out until they leased it all. BTW I am not HBP'd
Permalink Reply by j garrett on September 12, 2011 at 16:24
Maybe they swapped part of your minerals with Chesapeake.  You might end up with part in a PH unit and part with Ches. How do you know you are not HBP'd?
Permalink Reply by Joe Aldridge on September 12, 2011 at 21:04

Believe me - they know you are there and they know the term of the lease. So No, don't do anything. If they don't do anything by March 2012 then get a release. The first question is: Do they have a rental clause? Can the lease be extended be a rental payment?

 

I guess my next question is: Does the lease cover both properties? If it does that was a BAD mistake. If you have two properties they should be on two separate leases.

Permalink Reply by Jed Clampett Bn2 on September 13, 2011 at 1:41
They are seperate leases. Hwk had 0 interest in the section that Ches is in. I'll just sit tight. My main question is if they miss the deadline when my lease is up then I sould get addtional bonus money, right?
Permalink Reply by Joe Aldridge on September 13, 2011 at 2:51
That depends on how the lease is written. If there is an option clause or a lease rental clause then an additional payment may be correct. You may get another payment under those terms. If its a paid up lease and there is no activity then it would expire at the term date. At the end of the lease term request that a release of the lease be filed with the Clerk of Court.  You always want to ask for a formal release of the lease at term. Then landmen and abstractors will know that you are not under lease for that property.
Permalink Reply by The_Baron on September 13, 2011 at 3:27

Lets step back for a second.... I am a little confused.

 

I will assume you are in LA. I will further assume the acreage under lease is in a unit where a well is about to be drilled.

 

IT does not matter who you leased to. If you are under lease, and another company comes in and forms a unit and drills, you are HBP. This happens because all mineral interest and leases of record are force pooled into a unit. If any unit well is drill, regardless of operator you will be HBP.

 

Furthermore, are you sure your lease has not been assigned?

 

 

Permalink Reply by Jed Clampett Bn2 on September 13, 2011 at 4:03

No well yet and they will not, according to my estimates , have it producing before my lease expires. They do have a two year extension to renew it though.

 Yes it is in La.
Permalink Reply by Skip Peel - Mineral Consultant on September 13, 2011 at 4:14
The well does not have to be completed or produced by the expiration date, only spudded before the date to hold the lease in force.  Unless the well is non-productive and plugged and abandoned you are under lease and HBP.
Permalink Reply by The_Baron on September 13, 2011 at 4:43
depending on how loose the lease language is, it may not even have to be spudded. I have seen leases held by operations by simply moving in a rig.
Permalink Reply by Joe Aldridge on September 13, 2011 at 5:07

Jed,

Skip and Baron are correct. Plus, even if they are not under operations or production they can and probably will extend the lease with the option. Right now you just have to be patient. You have a valid lease and you are looking toooooo far froward. If they elect to pay the option they will probably pay it about a month or two before the term. If there is activity in the immediate area the lease probably will not expire. 

Permalink Reply by Jed Clampett Bn2 on September 13, 2011 at 5:28
Ok No activity around here at all especially Ches. Hwk drilled in the other section last year and hit a good well. I am patient, just anticipating my and their next move!! Thanks for all the info, I will wait and see.

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