We had a well that had been shut and abandoned. The lease was expired. A new producer purchased the well and sent a division order based on an old expired lease from the 1980s. They just notified us after drilling for over 13 months. Don’t we have the right to negotiate a new lease and terms?
Go back and read your lease that you thought was expired. How many months did you have in which to contact them and demand a release of lease? You may have a leg to stand on if they did not pay a shut in payment. You should try and fuss if your lease terms allow. Might need legal help…
Thanks for your response. I did further research and I thought I might shed a bit more clarity on the situation. I would appreciate any recommendations.
The oil company I’ll refer to as “A” originally contacted my family with a new lease. We were not ready to commit. We later discovered they had been drilling since Sep 1, 2021. We received a Division Order recently which is based on an old lease from 1981 executed by my great-great-aunt and uncle that states: "Unless sooner terminated or longer kept in force under other [provisions] hereof, this lease shall remain in force for a term of 3 years from the date hereof, hereinafter called “primary term”, and as long thereafter as operations, as hereinafter described are conducted [ ] [ ] [ ] with no cessation for more than ninety (99) consecutive days. (Note text indicated by [ ] is not legible.)
Prior to oil company A acquiring the well there had been no production for several years and oil company B indicated that the well was shut-in and would likely be plugged. In August of 2021 someone representing oil company B called to say they could either remove all equipment or leave it as is.
Oil company A “assignee” acquired the Well from Oil Company B and C “assignors”. In the Assignment and Conveyance dated as of 9/1/2021 it states: “WHEREAS, Assignor does not have any existing rights to any production from the Well other than the oil and gas production which may have produced prior to the expiration of the leases associated with the Well;” Also, Oil company A has an “Assignment of Oil, Gas, And Mineral Lease” from oil company D. I can’t locate any records of Oil Company D ever owning mineral rights to this property. Oil Companies A & D have the same address and owners.
Does this sound plausible?
Usually the specified days for operations refers to work over, repairs, and other on-site activities and so based on your description, it seems that the lease did expire. In that event, you would be an unleased mineral owner in the well. Or you can negotiate a new lease with a higher royalty rate and be sure to collect royalties back to date of first production. I suggest that you consult an oil and gas attorney to help you get the best lease terms and outcome. If this is a horizontal well with a wellbore underlying your minerals and you own 100% of the minerals, then you will have a stronger negotiating position. If you only own a fraction of the minerals and another owner of the tract has leased then you are still good. Be sure to take the old lease, all correspondence (written and email), permit and plat, etc to the lawyer.
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