Our family group lease of Block 33, section 29, lot 127 is nearing it’s end. After 4+ years in to a 5 year lease, we’ve begun receiving royalty payments. Now that a commitment has been made by the oil company to the site, what do any of you anticipate is the next step. I’m guessing 1 of 2 things. We will either be offered a longer term lease arrangement or an offer to purchase. Or something else? Any input or thoughts would be greatly appreciated.
If you are receiving royalty payments, some or all of your acreage is now tied up in production units. And any acreage in units is “Held by Production” (HBP) and therefore doesn’t expire - it is actively HBP until production ceases / then it reverts back to lease owners.
Step one for you now in my opinion is to figure out how much of your acreage is HBP and how much is not. That which is not HBP will be eligible to expire and will need to be released.
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Thank you for the info. I know these rights have been leased in decades past, but to my knowledge, this is the first time anything has been done to produce royalties. I’ll review the lease and look over the statements to see if I can get a feel for units being utilized. No doubt I’ll be back with more info and questions. Thanks again. Joe
Are you receiving payment for the NACHO 33-0-29 A 11H and the 12H, or just the 12H? Also, does your “lot 127” line up with the Tract 127 on the attached plat? As Rock_Man said, it really depends on how your lease is written.
If all of your lease is “held by production” then you won’t hear anything from the lessee. If part of the lease is not “held by production”, you may be approached with an offer to re-lease the unheld acreage. Occidental is still drilling in the Delaware basin, but not in Ward County (they’re in Loving and North Reeves). They may or may not be interested in holding onto the additional acreage if it’s not leased.
Plat plat.pdf (347.5 KB)
Acreage designation for 12H PR0005551714_0001.pdf (2.9 MB)
Thank you for the info Tracy. Payments only began in October of 21, but they have been for both 11H & 12H. This is 5 acres being shared by 6 of us. I really dont know anything as far as proximity to a specific tract. We’re not talking life changing money, but it’s not bad. From what i could understand on the lease, as long as production doesnt go offline for more than 90 days, we won’t be seeing a lease renewal.
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