If an operator of an active lease shuts in wells such that no wells are currently producing can the mineral owners cancel the lease due to lack of production in paying quantities?
Maybe. Answer depends on the written terms of the lease and all the facts and circumstances (such as any unit agreement, whether the operator is working on any of the wells, etc.), and on state law and cases. Consider consulting an oil and gas attorney, with copies of any related documents.
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The answer is especially dependent on the state the mineral interest/well is located.
Many issues would have to be reviewed prior to a credible course of action. In most cases shut-in is a separate issue from PPQ, but they can be related. Shut-in should only apply to gas wells, but I have seen some issues strangely apply to oil wells. You can make a demand on the party holding the OGL (not always the operator) and hope they agree; otherwise, you will need legal representation for a PPQ performance.
Thanks so much for your responses. Asking about Texas. Seems like there is currently a great deal of non, but recently producing inventory…especially more gas wells. Riding out the low price of natural gas?
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