Replies to This Discussion

Permalink Reply by JMan on October 24, 2011 at 3:01

if it is a gas well, then absolutely.  A lot of companies have shut in their gas production because the price is down.  when it rises, they will open the gas wells back up.

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Permalink Reply by The_Baron on October 24, 2011 at 4:26

sometimes its more of a problem finding a market for your gas, than just waiting for prices to rise.

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Permalink Reply by Geologist on October 24, 2011 at 4:52

I think you are right short term but in the case of multi-year shut-ins it is a matter of gas prices vs. operating expenses.

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Permalink Reply by Charles L. Evans on October 23, 2011 at 8:00

Does that apply to oil or gas wells?  If the shut-in or plug happened in 2006 would the delay rental money be owed me?  I saw nothing in the lease that forbid me from getting a new lessor but ExxonMobil is silent about my shut-in royalties.

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Permalink Reply by JMan on October 24, 2011 at 2:11

Yes it applies to gas and oil wells.  The company doesn't want to lose the lease so they hold it by production.

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Permalink Reply by Geologist on October 24, 2011 at 3:01

It applies to any lease that speaks to shut-in royalties which I am willing to bet is your lease.  Unless you have a continuous operations clause in your lease it can be held indefinitely if shut-in royalties are paid as stipulated by the lease.  If the well has been plugged and the lease isn't held by production elsewhere then ExxonMobil has lost the lease.

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Permalink Reply by Eric Camp on October 20, 2011 at 9:17

Agreed. When you get a copy of the original lease, the shut-in provision is almost always in the royalty paragraph - so look there first. Next time make sure you get a copy of the full lease at signing.

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Permalink Reply by John Brewster on October 20, 2011 at 10:40

As Skip has said, the answer depends on the lease language.  The Baron suggested you ask the operator for a copy.  Presumably you know who you leased to.  Most likely it was a broker, but since the well produced and you were paid for a time, the party who sent you a check is who you need to request a copy of the lease from.  There will be a shut-in clause.  If you are lucky there may also be language that the lessee cannot maintain a lease by paying shut-in royalties for more than maybe two years.  That is in some lease forms but a majority of the forms do not include that limitation.  Don't do anything until you have a copy of your lease.

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Permalink Reply by Raymond J. Forbish on October 20, 2011 at 11:01

The quick answer is No.  The well may be shut-in for lack of a gathering pipe line connection.  You need to read your lease.  Now, if the well is uneconomic, the leaser can not hold your lease indefinitely. 

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Permalink Reply by Charles L. Evans on October 23, 2011 at 8:02

If the lease is producing after thirty years and there is oil reclassification in one of two wells why does ExxonMobil refuse to pay me shut-in royalties?  How can I break that lease?

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Permalink Reply by Geologist on October 24, 2011 at 4:56

You aren't due shut-in royalties if there is a producing well that is holding your lease unless there is a well specific clause.  If you are receiving any money on any wells that are within the lease boundary and there is no pugh clause then you don't get shut-in royalties.

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Permalink Reply by Bill R on October 20, 2011 at 14:02

My family has six wells that are shut-in with one of them locked out of production for just over five years now.  Each family member gets their $1 per year from it and the O&G attorney says we are locked in until it either produces or is capped. They send them to use certified/registered mail which acts as a 'acceptance signature' for the check.

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