Replies to This Discussion

Permalink Reply by jffree1 on August 29, 2010 at 11:47

The well doesn't have to be producing to HBP past the end of the lease term. But they do have to be drilling or otherwise making an effort to produce hydrocarbons. I would say that the drilled but uncompleted well will hold the lease for a period but not indefinitely. Check your lease regarding shut-in conditions and how long they can pay shut-in royalties to maintain the lease. You might want to have your attorney review the lease... he/she may give you a more definitive answer.

Permalink Reply by Bill R on August 31, 2010 at 8:52

Yeah I was trying to find out if a well in process fell under the guidelines of shut-in conditions. Nothing in the wording of our lease states that wording, one of them does state that a well can be considered as shut-in if drilled and waiting frac or pipe, but nada on the in process of drilling stage. Nothing that I could find on the RRCT site about that either.

Permalink Reply by Skip Peel - Mineral Consultant on August 31, 2010 at 8:59

There are those who would argue the definition of "operations" as they pertain to site work other than actual drilling but unless your looking for a law suit it's safe to say that a well which has spud (drill bit hits the dirt) prior to the lease termination date will hold the lease in force. After completion, it becomes a matter of lease language concerning shut-in rights and requirements.