A lot of these E F wells are flaring the gas for many weeks until the pipe lines are installed . They flare this gas so they can get the oil . The operators look at this as a cost of doing business . The mineral owner `s are probably looking at their lease ( which is probably silent to this activity ) to see if they get compensated for the gas being flared .Makes you wonder why the operators do not wait until the pipe line is installed before producing the well .Your thoughts on this .
My question pertains to when there is no gas or oil being produced or sold in the context of a shut in clause. My lease offer states that paying the lessor $1 per acre per year........ "when such payment or tender is made it will be considered that gas is being produced within the meaning of the entire lease." This seems to be a pretty cheap way of sitting on a well. Is this a "standard" offer and what would you advise regarding shut in protection.
RM, I'm not Buddy but I can say that is a common offer. What can be done about the $1 per year shut in royalty ? You can bargain for more shut in royalty say $50 per acre per year and limit the number of years a well can be shut in to 2 years or two years cumulative if the well is shut in more than once. The penalty, If it were my lease would be forfeiture of the lease if the well were shut in 2 or more years at expiration of the primary term and the lease would not be saved for more than 2 years beyond the primary term except by production. I would also keep the continuing operations clause to a short grace period, no sense tacking on a free half year to every lease. I think ideally that nothing but production should save a lease. If the lessee needs more time than they bargained for, they should have bargained (and paid) for more time. If the operator runs out of time they can offer to lease again, if the transaction was smooth the first time then you will be disposed to accept their offer. If the operator yanked you around, you probably won't want to do business with them again.