Hello! I understand what a shut-in payment is used for, but is there a point where (now 2 years of receipt) we need to ask questions about the shut-in payments before making a deposit? e.g. are we doing something as mineral owners that is not beneficial by continuing to extend leases held by others for a year? I am sure I’m missing something, but before I deposit this next round we received (Colorado) would love a 101 breakdown of benefits/downside in doing so? Sorry for a very basic question. Just haven’t been able to sort it out on my own. Thank you!
You can start fussing, but you may not get anywhere. If your original lease did not have a time limit on the shut-in payments, you don’t have much legal standing.
Originally, shut in payments were designed to keep a lease until a pipeline could be built. Some operators use them to drag out operations and hold the lease indefinitely for a very cheap fee.
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Thank you! We own the minerals but receive shut in payments are for leases that they are holding in someone else’s name. Is there a way to find the lease to see if it has a time limit on shut-in payments? Is this public info?
Ask the operator for a copy of the lease. If they don’t have it, then they may have bought the lease. The leases are supposed to be filed in the county where the minerals are located. In some states, they only file a memorandum of lease, so that is not so helpful. That is why I start with the operator. Many counties have their leases scanned digitally, but they often do not go back very many decades. Just depends…
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