landowner

What happens if you are leased to a different company than the one that drills and no one else is?

Suppose you lease your 5 acres to a small company. The rest of the land in that section goes to a larger company. The large company drills a well. Do you get anything? Does the bigger company buy out the smaller company? What if they don't?

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Permalink Reply by Quattro on December 10, 2022 at 7:59

Bumping this thread.

I am assuming the information providing is still valid?

Any other risks of leasing with a non-operator?

Trying to research this.  A non-operator is potentially offering better terms than the operator. 


Oil & Gas ProPermalink Reply by Skip Peel - Mineral Consultant on December 10, 2022 at 9:17

If you are referring to Compulsory Units, as all the Haynesville units are structured, yes the advice is still good but there has been a new wrinkle since 2009.  If you were leased to a lessee (Working Interest) who did not "consent" and pay their proportional share of well costs, in the past that could have been a problem.  The unit operator might chose to not pay the Working Interest and the Working Interest wouldn't pay their lessors.  This happened often enough that the state legislature amended the mineral code to require operators to pay the Working Interest only the amount due to their lessors so that the Working Interest could keep their royalty obligations paid.

Permalink Reply by Quattro on December 10, 2022 at 13:19

Skip, do you consult with landowners?


Oil & Gas ProPermalink Reply by Skip Peel - Mineral Consultant on December 10, 2022 at 17:55

On a daily basis.  I've never worked for the industry.  My clients have always been individuals, families and LLCs that hold significant mineral assets.  Those are my paying clients.  I answer a lot of questions and provide opinions at no charge depending on the circumstances for GHS members.  I was mentored by O&G attorneys who represent land and mineral owners.

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