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Permalink Reply by Skip Peel - Mineral Consultant yesterday

Walker, the field wide unit reported 4,461 barrels of oil for February, the most recent production reported.  So prescription is not an issue.  The question would be is 4,461 "production in paying quantities"?

In Louisiana, for a mineral lease to be maintained beyond its primary term by production, that production must be "in paying quantities"

Production in paying quantities generally means that the production must be sufficient to induce a reasonably prudent operator to continue production to make a profit or minimize loss. For oil and gas, this means the revenue from the well should exceed the costs of operating and marketing it. For other minerals, a reasonably prudent operator would continue production based on the specific circumstances and industry practices. In the case of lignite or coal, the total production of a project can be considered, not just from a single lease. The standard focuses on a prudent operator's decision to continue operating for profit, not speculation. Courts consider revenue, operating expenses, and other circumstances like reservoir depletion and product price. Importantly, the lease itself may define "paying quantities," and courts may resolve disputes on a case-by-case basis. 

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Permalink Reply by Walker yesterday

Thanks for the response.  

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Permalink Reply by Skip Peel - Mineral Consultant yesterday

You're welcome.  The production in paying quantities test is something that requires an experienced attorney and some legal expense.  A succesful end result should be significant to go down that road.

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