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Permalink Reply by Skip Peel - Mineral Consultant yesterday

Diana,  I looked at my private database to see if all three of the units being produced in those two wells had LUW code numbers.  Although the state is far behind on issuing LUW numbers for new wells that are first production in a unit, this is not your case as all three units have original unit wells and LUW codes assigned years ago.  I've been communicating with the SONRIS staff in Baton Rouge about this very unusual situation and the answer that I get is that they are short staffed.  I do know that two of the key department heads left the DNR/OOC when the new administration took over.  The  department is now led by an individual that was previously the head of the Louisiana Mid Continent O&G Association.  I'll let you draw any conclusion you may choose as to that situation.

BPX has always been slow to play but now the company seems to take the state's failure to timely process production reports as an excuse to withhold royalty from mineral lessors and production payments from non-operating working interest owners.  The industry knows what they can get away with and do it on a regular basis.  They know that the vast majority of their mineral lessors will not spend the money to pursue a demand for payment with interest.  With low natural gas prices over the last eighteen or so months, a number of Haynesville operators have done this.  I wish I could do something for all those mineral owners being disadvantaged but I doubt that the current administration will take any action on behalf of the little guys.  Like the operators, they know that there is little for them to worry about from a handful of upset constituents.

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Permalink Reply by Hale Yayuh yesterday

I haven't kept up with the law on this situation but a few thoughts... if your lease is not HBP (held by production) by another well, I don't think they can sit there forever and do nothing. If the primary term of your oil n gas lease has expired, I would think they would need to produce it (from some well) or pay shut-in royalty, which is a small amount, but it allows them to 'extend' the lease by such payment.

Bottom line... If your tract is not HBP by production from some other well, and you have not received shut-in royalty, and the primary term of your oil n gas lease has expired, you may have a case for demanding release from your lease if that is something you desire.

If your tract was ever HBP by production from some other well (which seems to be the case if an LUW code exists), they can't hold the lease indefinitely without production, even if they have a new well sitting there waiting to go, but shut-in.

BP is near or at the top of the heap for oil companies. The biggest of the big move very slowly due to bureaucratic, huge company burdens and also just because they can. But you might be able to call their bluff on this.

Skip can reply if this is erroneous.

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Permalink Reply by Skip Peel - Mineral Consultant yesterday

Hale and Diana, in this case there are producing wells in all three sections so the lease is Held By Production (HBP).   This is the case in the vast majority of Haynesville drilling units.  As always, the specific details for a section/unit are important and it is difficult to make a claim that covers all situations.  Using SONRIS is a big help for mineral owners.

The only way I can think of to address this situation would be for multiple BPX mineral lessors who are all in the same situation of non-payment on long producing wells to engage the services of an experienced law firm that will make demand for payment and interest on behalf of each sharing that cost.  I had success with the previous governor and administration in advocating for the DNR/OOC to enforce their regulations and do what is in the interest of the private mineral owners.  I wouldn't suggest that with the current administration.

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Permalink Reply by full name yesterday

I had the same issue several years ago.  A demand letter got their attention.

On a related note, this is the third year BPX has not sent a 1099.  The past two years I was able to get a copy emailed to me ten days after the due date.  This year they said they had "issues" and could not email me a copy until the "issue" was solved.  My CPA put a note on the return stating that BPX did not send a 1099 since this type of return has to be in by the end of February. This is the only gas company that has failed to send a 1099 on time.

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Permalink Reply by Skip Peel - Mineral Consultant yesterday

BPX has surpassed Chesapeake as the most hated Haynesville operator.  My O&G attorneys complain about them all the time.  When even a known O&G focused legal firm has trouble, mineral owners stand little chance.  Sad.

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