I’m not entirely certain how this renewal will work but here goes.
So my father, who has since passed, signed mineral rights for a 7yr lease in a parcel totaling 52 acres, and a second parcel contains 2.5 acres. The 7 years is up at the end of this month, September of 2024. I received a renewal check for the 2.5 acre plot in august.
my question is regarding the 52 acre plot however. 4 acres of the 52 acres were drilled from one well pad in 2021 and are producing, should I receive a renewal check for the other 48 acres that aren’t producing? The Lessee company told me I won’t be receiving a check, but that feels a little unfair considering that the vast majority of the land isn’t producing. So looking for advice on this. Thanks!
Welcome to the forum. Condolences on the passing of your father.
If you would share the location of the 52 acre plot, we can probably help. Give the Section, township, range, county, state (or abstract, block, section if Texas)
Depending upon the type of well, the spacing will vary. If the well is producing it is draining way more than four acres, so the lessee company is probably correct. We can probably show you a map.
Leases have a primary term (your 7 years) and a secondary term. If a well is drilled and is productive, then the well moves into the secondary term which can continue for decades. The lease is considered HBP-Held By Producion.
Next time on the 2.5 acres, recommend that you do not lease for more than 3-5 years and do not take an option. You are at the mercy of the lessee for way too long.
JEP, when you say 4 of the 52 acres were drilled, do you mean somehow only 4 acres were included in the unit that was formed to drill that well in 2021?
If that’s true the answer to your question may depend on the wording of your lease. Did it include a Pugh Clause requiring at the end of the primary term of the lease for any acreage not included in a producing unit to be released (meaning the lease terminates as to that acreage)?
I’m also curious about the term “renewal check” you mentioned regarding the 2.5 acres. Did that initial 7 year lease also include a renewal option? If not at the end of the 7 years you should have had the chance to negotiate a new lease if the lessee wanted it to continue, not just automatically extend it by making a flat payment. Check the wording in your lease.