We are leased by EOG, our original lease expires 1july 2012 but EOG has option for 2 more years. EOG is drilling all around us as close as 1 We are landlocked by other properties that are also EOG. We are locked in by non-EOG properties from a public road near cr328 and cr 219. I'm wondering if a well is forthcoming or will they just renew the lease?
Does your lease have an offset well provision? If so, what does it say? Under Texas law, without some express requirement in the lease, the lessee has no obligation to drill a well during the primary term, which in your case is effectively 5 years if you assume they exercise their option. However, your lease may require they drill a well during the primary term to offset production from a well drilled on an adjacent tract. If your lease does not have such language, then your recourse is to determine if one of the adjacent wells is close enough to your tract to support a drainage claim that would require a reasonably prudent operator to drill an offset well. What are the names of the wells EOG has drilled next door? You can obtain the plats and other information off the RRC website to see how far off your lease line the take points are.
| BORCHERS KOENNING UNIT | 1H |
One well being finished is Borchers Koenning Unit #1H and there is a permit for a second well on the pool. I assume from the look that they will drill at least two more wells on the property, however, none of the well that are or could be drilled on the pool will be close enough for the offset provision. The problem is that my family is worried that EOG will not drill on our property or include us in a pool because of the way our property and surrounding properties are locked in from access to a public road by other non-EOG leased property;
I feel this should not be an insurmountable problem as we sit atop the thickest area of the shale, but, ??? who knows. None of the property owners around us have heard from EOG, we now think it may be better if they just paid us the lease money for the next two years, at least that would give us some working capital. It is hard to wait though for some of my older family members as we have been offered 5.5 mil for the lease rights.
Without seeing your lease, it sounds like you may have to wait to see if they release you or exercise their option.
I just read the following & wonder does this affect existing leases now that were written in 2009 between royalty owners & oil companies?
“The Texas Supreme Court issued a narrow 5-4 opinion in Murphy Exploration & Production Co. — USA v. Adams on June 1, 2018, interpreting a common “offset” clause contained in a 2009 oil and gas lease. The majority held that the phrase “offset well” in that clause does not necessarily refer to a well that would protect the leasehold against drainage, but instead referred to a well drilled anywhere on the leased premises that was drilled to a depth required by the lease. The Court reached this conclusion based on interpreting that phrase in light of “surrounding circumstances” evidence of the discovery of the Eagle Ford and drainage patterns of horizontal shale wells. Four justices dissented in an opinion that, among other things, accused the majority of disregarding the commonly understood meaning of the phrase “offset well,” which is a well designed to protect the leasehold from drainage."