The Affidavit will be of more assistance to you in negotiating with the Operator or potentially a new OGL. I have been purchasing minerals for 40 years for my own account. I have not sold a property in over 30 years. This combination has allowed me to better understand both sides of the transaction. I would tell you since there is a title question of whether the OGL is still effective, then this diminishes the market value of your minerals. Also, your Buyer will use this as a negotiating tool in their favor. Non-producing minerals always have less value in the market. If you are able to lease the minerals anywhere in the near future, then you should be able to get a value similar to the purchase price offered by the broker. With that said, I have minerals that I bought 30 years ago that have never been leased. If your situation allows you to be patient, then that may be your best course of action. None of this provides you with a direct answer to your situation, but that is inherent to being a mineral owner.
Just as you, I have been a mineral owner for many years. I started as a landman and then progressed to purchasing minerals. I was lucky enough to be mentored by some great professionals along this journey that helped me develop solutions to title and management issues. I am now a mineral owner in 8 States. Mineral owners face the challenge of dealing with too many people/companies that are not professional. I have seen many of the issues that you have mentioned. Many times we find contract provision application are not what we want, but they are within the scope of the contract. Then there are those that attempt to go well beyond the intent of the contract.That is why I think it is important to share some practical solutions on this site. You have provided some great contributions and I appreciate the time required on your part…
Thank you so much for the information. It’s very complicated and hard to understand. I figured the lease had something to do with the low offer and feel like I have ran in to a wall everytime I try to get help. I still don’t understand why they won’t release it if they are telling me its not economic to produce them. I need a 2nd grade explanation- because it just doesn’t make sense to me. - Very thankful for this site because there are so many people on here that are helpful. - Also- Tracy Lenz at Pecan Tree Oil and Gas has been the very best person I have worked with so far. She did valuations for us and has gone above and beyond. M Barnes on here is always, always helpful too. You sound VERY knowledgeable- and I thank you so much for all of your great advice and for taking the time to comment.
I have spoken briefly to Tracy in the past. She seems to do great work and provide sound advice. I have been in your situation a few times in the past. Unfortunately, this generally does not resolve quickly and can prove to be expensive depending on your approach. This is why I suggested the Affidavit as a low cost method to establish your position as a part of the public record. Demand letters rarely are successful in these cases, but sending a copy of the recorded Affidavit to the operator can prove to be helpful at times. Make sure to only include the time period since your last payment, list the book and page number of your OGL as it is filed in the county. This is the OK Tax Commission Site where you can check on recent production https://oktap.tax.ok.gov/OkTAP/web/_/#5 . This link does not work all that well so you may have to call the OTC for help.
I did a quick check of the OTC records and show no recent production covering your lease. I also checked my production database and that indicates there has been no production since 2018. You may want to contact the Oklahoma Corporation Commission and ask what the OCC position is on the plugging of these wells. If it has been 5 years since the last production, then Contango has no position. Good luck to you.
I see where they have turned one of those wells into a disposal well. - Can they do that ? It says a disposal well is active on Shale XP. Can they hold my lease to make a disposal well in one of my wells that they have shut in??? That just doesn’t seem right. They still have not released the lease. We finally retained an attorney to write them a letter requesting it be released.
You cannot extend an OGL with a disposal well. The OGL requires the production of oil or gas in commercial quantities.
Thank you James 
All so confusing.
Limiting my answer to one item discussed above. In Oklahoma, the failure to pay shut-in royalty payments does not cause a lease to cease/terminate. Gard v. Kaiser- The Oklahoma rule is set forth clearly in 4 Kuntz, The Law of Oil and Gas § 46.3:
“In a jurisdiction where marketing is not required as a part of the production and a commercial discovery of gas will satisfy the habendum clause, the shut-in gas royalty clause is not required as an additional special limitation to extend the term of the lease. The lease is extended with or without the shut-in gas royalty clause, subject to forfeiture for failure to comply with the implied obligation to market the product.”
Tim, the issue/question was a disposal well attempting to extend the OGL term which of course is not possible. Shut-in issues may apply dependent on the well designation. Contesting commercial production requirements almost always prove difficult.
Don’t disagree. but there are references in this thread that say the failure to pay shut in payments means automatic termination.
3 The Court noted that in Oklahoma the shut-in royalty clause is “ ‘not required as an additional special limitation to extend the term’ ” of an oil and gas lease after a commercial discovery of gas satisfies the habendum clause. 582 P.2d at 1313 (quoting 4 Kuntz, The Law of Oil and Gas, § 46.3). Such a commercial discovery (capable of producing in paying quantities) extends the lease with or without the shut-in royalty clause, and the lease continues “subject to forfeiture for failure to comply with the implied obligation to market the product.” . 7 ¶ 24 We then held that “shut-in gas provisions are not to be construed as limitations or conditions which would affect termination of the leases,” 582 P.2d at 1314–15. Thus, the failure to pay shut-in royalties in and of itself does not operate to cause a termination of the lease. Rather, it is the failure to comply with the implied covenant to market which results in lease cancellation.
Tim, I saw your post as a reply to mine. You are correct with your point and provide valuable information for this site. More owners need to become better educated on OGL terms and the potential challenges when the focus is royalty/bonus. Thanks for the post.
Believe me - I have worked diligently in an attempt to understand the language in the lease. I did not assume that the lease would terminate due to failure to pay shut in payments- that is the least of my concerns. I am concerned that I have 320 acres of minerals held by a lease with no production and when I did have my meeting with the gas and oil attorney he wanted $450 and hour- did not know how many hours it would take to research my lease. I have reached out to an engineer for assistance- however she is not an attorney and cannot make reccomendations. I have worked with 2 landmen- I have emailed Contango multiple times- they are rude, will not assist me, told me they will not release my lease- yet they have gone over a year now with no production. If they can’t make money from it why won’t they release it? It absolutely should not be this difficult to work with the oil company- or get answers- or terminate a lease. I am really trying. It should be cut and dry- no production- no lease. VERY difficult to familiarize yourself when the oil companies are eager to lease and explain the lease at the time… but when problems arrise - you’re on your own.
This is a reason why a lease should be reviewed by an oil and gas attorney before signing. It should contain provisions that the lease terminates if production ceases for a specified period of time, eg 3 months or 6 months, unless there is continuous activity such as well workover, and that the well must be producing in paying quantities with a definition being revenues exceeding costs over any 6 or 12 month period.
Jennifer, I understand your frustration with this situation. Have you contacted the OCC, as I suggested, and asked their position on the plugging of these wells? This may also create some frustration for you since the OCC is more producer than mineral owner friendly. Since you are getting nowhere with Contango and you do not want to engage an attorney, then I again suggest that you consider filing an Affidavit of Non-Production in the County Recorders Office. You should provide a copy of the recorded affidavit to Contango. The Affidavit should be simple and factual without the inclusion of any opinion. This will not be the same as a release of the OGL, but it will serve as public notice that there has been no production and you consider the OGL expired due to lack of production. An attorney should be able to draft this simple Affidavit for you to execute and record at a reasonable/fixed cost. Good luck.
Jennifer, do you know if these were designated as oil wells or gas wells? The OGL clearly has a shut-in clause. If Contango said there is no shut-in, then this may indicate the shut-in clause is not applicable because they are oil wells.
(i think this message got approved first, but it’s a follow up to longer message that’s waiting on approval) But also, this is an interesting case that I think ended up getting the leases released CV-2017-00069_Trial_Brief.pdf (2.0 MB)
Just seeing this thread! (btw, y’all are so sweet 
)
I’ve been asking around and Hall v. Galmor has been a case that some have brought up. Oddly enough, it seems the wells being capable of producing in paying quantities is all that might need to happen to hold some leases? I’m definitely not an OK lawyer (or even a good one…ba dum bum) but it’s a weird situation. I don’t think Contango is leaning on the shut-in terms at all, based on some of the case law I’ve seen and their wording of the responses.
It sounds like they have the wells (which again, are capable of producing) shut in because they’re negatively affecting wells in an offset lease and they “can’t” turn them back on because of the other wells. So they’re basically letting the offset mineral owners benefit from their decision on which well to produce when there is communication within the reservoir. I’ve only had this come up in Texas before which is a bit more straightforward, but it just seems like such BS to me.
Jennie, I hadn’t suggested any action yet simply because some of the contacts who reached out to me after polling my network suggested they might consider something that was filed with the implication that the lease was released might end up being called “slander of title” if they proved some BS case law was on their side. It’s a tricky situation, especially when the wells weren’t barn-burners before being shut-in. Making money for sure, but this stuff can get so expensive when it’s complicated like this.
Tracy- you have been AMAZING… I understand why you can’t advise me. You have been the most helpful - and I can’t thank you enough. Thank you for linking that case. - What you wrote is exactly what is happening. Nor sure what I am going to do. Thank you everyone for all of your input. My grandma originally signed these leases and she did hire an attorney to review them. She was an amazing business woman. I am thankful for everyones advice- and so thankful for Tracy Lenz at Pecan Tree Oil and Gas- she has truly been the best person in every way.
Some good advice Tracy. Many people make the mistake of including non-factual items within an Affidavit of Non-Production. The best course of action with an Affidavit is to leave out any conclusion as to the effectiveness of the OGL and allow the facts to speak to the issue of non-production.
The correlative rights and drainage issues you mention present a deeper conflict and complication. All combined these create a convoluted legal matter for the mineral owner to resolve which generally will contribute to high legal fees. Jennifer is in the difficult position of currently receiving no money from the property and in conflict with a company that is trying to sell their interest in the property. There is no easy resolution to the matter. Contango will not release due to the potential value of a possible sale and Jennifer will not receive any immediate value from a ROGL.
Given the facts of the situation, if Jennifer is unwilling or unable to retain counsel, then there is little hope of a resolution in her favor. Unfortunately, too many mineral owners find themselves in similar situations and discover the value of including professionals early in the leasing process.
Correct me if Im wrong, but all of this stems from trying to sell 1/2 interest in 320 acres for $30,000.00? If you were to spend $1000’s on attorney fees to get this released, did the buyer that approached you indicate what they would pay more if the minerals were to become open? If so and they are a legit buyer, they should be able to take the lead on this and work it out.
If it were me as a cheap old fart, Id see whos taking new OGL’s around you/if there are any operators besides the one you are having problems with in the area and approach them saying you have 320 acres, describe your situation you are currently in and let them do the work free of charge to get it released if they want the acreage. Its a tough situation to be in though due to you owning 320 acres, the only people that would be willing to take the lease and mess with getting the old one released would be an operator if the mineral company that made the offer cant.