We have a mineral, royalty interest in one shallow oil well from the Prue sand in Lincoln county, OK.
In 2021 it only produced/sold 20 bbl. In 2022 the well produced/sold a total of 60 +/- bbl. (avg. apprx. .15 of a bbl/day).
My minerals are held by a lease agreement from 1969 that read the lease continues to be held in the secondary term " the lease is held as long as Oil, gas… is PRODUCED from said leased premises… or drilling operations are continued…"
There has not been any drilling or recompletion on this well going back decades!
How little oil must be produced by the operator to claim the well is producing oil and they have a right to hold my minerals under that old lease? Wondering if there is any case law in Oklahoma addressing this question? If .15 of a bbl./day avg. is still enough to hold the lease what amount of production/day makes it effectively insignificant under the terms of the lease agreement?
The lease only had provided for a 1/8 royalty and I’d like to force them, at least, to raise my royalty to 3/16 or 20%. They already rejected my demand to renegotiate the lease.
Thanks for any comments about this topic.
We had a rumble on this. (Our operator changed, he had bought 77 wells in our county, and we didn’t know it. No signs were at the gates). I had contacted our district OCC office. They came out, several things were out of order and wrote complaint tickets to correct within a certain amount of days. One of my complaints was no production for a long long time. The previous operator was a salvage company too, so he didn’t produce anything either. We had asked him to remove ugly pump jacks. After the OCC district did their inspections, the new operator pulled the well and we get $100 at end of the year. The #1 well we griped about is on a timer for about 15 min a day to keep producing? Other two have been shut in. All of this resulted in just turning the well on briefly and hard feelings with the new operator because I already had two old unresolved tickets with OCC on the previous operator. He did not know there were two unresolved ticket complaints when he bought all the wells. If there is a mortgage on well equipment, not much will get removed but you can insist they clean up salt water and fencing. Find out who the operator is through OCC.
Unfortunately, this is a common occurrence. The answer hinges on the words “producing” or “producing in paying quantities” in the lease language. You really want the latter phrase, but many of the very old leases only have the first word and that makes all the difference. “Paying quantities” means that the revenue from the lease has to pay the expenses such as the electricity to pump the well, personnel to some check on the well, maintenance, etc. “Producing” does not necessarily produce enough revenue to pay the expenses and can keep a well online or barely online far beyond its economic limits and hold a lease far beyond what many of us would want.