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Permalink Reply by Skip Peel - Mineral Consultant on October 4, 2012 at 3:55

jeff, there are different kinds of demand letters depending on what it is you are demanding and the laws of the state in which the mineral interest is located.  I think it may improve your odds of getting accurate responses if you include that information.

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Permalink Reply by jeff on October 4, 2012 at 6:28

Skip, your right I should have been more specific. The subject wells are in Rapides Parish and there are two of them. We want the operator to do something, plug or produce. They have been shut in for a few years now.

THX

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Permalink Reply by Skip Peel - Mineral Consultant on October 4, 2012 at 11:08

If the lease is in the primary term the operator is not required to do anything with the wells.  If the primary term has expired, what does the lease say about shut-in provisions?  Standard lease forms usually allow shut-in payments to hold a lease in force without production for up to 2 years.  If the primary term has expired and the shut-in payments are not paid or the shut-in period has expired you would need to send a letter terminating the lease and directing the lessee to record a release of lease with the Rapides Clerk of Court.

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Permalink Reply by jeff on October 4, 2012 at 12:51

Skip, the lease expired in its entirety with all caveats and shut in payments ignored. Does the release by lessee have to come first or after the plugging demand?

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Permalink Reply by Skip Peel - Mineral Consultant on October 4, 2012 at 13:01

jeff, at this point you need a good O&G attorney.  Sending a certified letter terminating the lease will likely get the issue front and center with the lessee.  I certainly don't know all the specifics but I'd lean toward terminating the lease as opposed to allowing the operator to produce the well if that is possible.  There is likely language in the lease that anticipates lease termination and is designed to hold a minimum footprint around a producing well.  The state will take care of requiring the operator to follow proper P&A procedures.

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Permalink Reply by Andrew on December 9, 2012 at 7:59

Another strategy may involve following up with state, which enforces plugging obligations. If you are worried about an open well on your property, this may be helpful.

If you are just hoping to be able to lease your property again, you would just need a release from the company, plugging the well would not be necessary.

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