My family has minerals under lease in Yoakum county, with the lease term due to expire in about two months. My question is: Does the act of pulling a drilling permit just prior to lease expiration generally stop the meter, or must actual spud-in occur to keep the lease active? I believe the operator has intended to put this on the drilling schedule before the current lease expired (they say) but it didn’t happen. I was wondering if pulling a last minute permit typically results in the lease term being extended without new lease negotiations, with corresponding additional lease bonus payment?
Typical leases require a well to be spud or dirt to move on location (“operations”, which may or may not be defined) in order to satisfy perpetuating the lease. I’m sure they exist, but I’ve not personally seen one where a simple permit would hold a lease.
If they have the right to extend the lease at their discretion, filing the permit might indicate they might have a reason to send you a check before the date required…but even still doesn’t guarantee they have their act together to realize it even if they DO plan on drilling soon. (which I say with love for the overworked, understaffed land teams most of these operators have…it’s nothing against the individuals, just the game itself).
Do you want a new lease negotiated or do you like your terms/bonus?
In regard to the existing lease terms, I believe we have favorable lease language. We did an extension two years ago at a somewhat lesser lease bonus per acre due to the COVID spawned industry downturn in April 2020 when nothing was happening, and everything looked gloomy. I thought we were fortunate to get that. In return for accepting somewhat less in bonus dollars, we reduced the lease term to two years. We figured they would either drill like they intended within two years, or the industry outlook would hopefully be improved enough to ask for more bonus money in 2022 when it comes up for renewal again. Seems like we are there currently with oil prices at least, so we shall see what happens in the next couple of months.