Know Your Rights - Texas Mineral Law
Place to discuss and learn about oil and gas legal issues in Texas.
How long can a operator hold lease after older well is shut-in? Question for Ben or anyone
A James Lime Well in East Texas drilled and produced for 9 years so HBP a 600 acre lease with this one well--- Well made < 150 mmcf of the 9 years and last production about 1500 mcf in month ~50 mcfd --- CHK came in and removed everythink off pad site about 6 weeks ago--leaving only the drill site with pipe with control valve--- I assume well shut-in. This was on a old standard 88 lease I understand but have not seen or read it. How long does operator have in time to notify all royalty owners if well is shut-in? How long in general can they HBP (Shut in) the well? In chance on getting release of lease in nothing done with in 90 days and what required to get them to release the lease ?
adubu
Ben--- Found answer after talking with operator ----they have 90 days, but they will most likely plan to just P&A by that time.
Nov 29, 2011
Ben Elmore
It depends on what the lease says. Sounds like it contains a 90 day cessation of operations clause and a 90 day shut-in well provision, which means they must pay shut-in royalty within 90 days after it is shut-in for it to be considered "constructive production" to hold the lease. But since they plan to P&A the well before the 90th day, they don't owe you shut-in royalties. Question then is what is holding the lease? Is there another well? Are they conducting any other operations? Is there a Pugh clause?
Nov 30, 2011
Alvin T. Kmiec
It would also be good to check and see if the well has been unitizatize. If so they can hold it unit ever drop is gone. Here is something to check on about unitization. http://library.findlaw.com/2003/Jan/30/132512.html
Jun 9, 2012