How to terminate an old, barely producing lease

Law & Legal
1

I recently acquired 150+ acres of land and mineral rights in north Texas. The original lease was from the 70's but reassigned several times. My acreage is part of a pool, and there is only one gas well producing on the pool. No active wells on my property for decades. The previous owner was getting about $30/month royalty from the pool.

My question is this: Can I break the pool or get out of the lease all together due to lack of production?

The area is relatively active for new barnett shale and marble falls oil wells. I would like to terminate the old lease, so I can sign a new one and get some pipe in the ground. Neighbors are getting $200-$600/ acre bonus and 18% - 22% royalty. Any advise would be greatly appreciated.

2

Don:

I believe that the answer to your question will be found in the content of the original lease. If you don't understand the wording, you might want to seek help from someone experienced in that field.

3

Is it best to discuss with a new oil company, or an O/G attorney?

4

Probably an attorney, although a new company will not be interested if your lease is held by production.

One thing to look for is whether your original lease allowed the lessee to pool your property without your consent. However, there are alot of moving parts on whether you can terminate, not just this.

5

Thanks Wade

Wade Caldwell said:

Probably an attorney, although a new company will not be interested if your lease is held by production.

One thing to look for is whether your original lease allowed the lessee to pool your property without your consent. However, there are alot of moving parts on whether you can terminate, not just this.

6

Don, There are ways to cancle a lease that barely produces. I have read court cases where it has been done becase the operator failed to properly develope and/or market the lease in accordance with the Ilease terms. You can get a copy of your lease and reported production and consult with an oil and gas attorney, but most likely the new developers in the area will cut a deal with the old ones before you can get to court. Keep an eye on out for anything filed of record transferring lease rights. Hope this helps…

7

I have had success negotiating this on our family land in the past and I'm not a lawyer. It's relatively simple. It takes work and common sense.

I found each situation to be different but not overly complex.