My siblings and I have been receiving royalty payments on Sec 2, 7N-8W in Grady County for many years. Like many other folks have experienced, the company paying these out changes over the years. On this section, Limerock is the current company and have been for several years. After a year long court battle with Rebellion and others, Raintree recently came out the winner and is gearing up to drill a horizontal well, much deeper, on or near the same section. When I contacted them about an expected contract from them, I received a prompt reply re. that section being currently leased by Limerock. Here is an excerpt from this correspondence - “As for 2-7N-8W, your existing lease is held by production, as you are receiving revenue payments. Your lease covers all depths, so a new lease will not need to be obtained in order to drill at deeper depths.” I thought that, since Raintree will be drilling a deep well, the older well currently pumping for Limerock are separate agreements, we would all need to sign an additional contract with Raintree. Anyone?
No Sir. The lease in place stays in place until it expires in its entirety. The Lessee can assign it to anyone they choose to, or as is possible in this case, Limerock will probably participate in the drilling of Raintree’s well(s) with your lease and any others that they may have. If Raintree’s venture is successful, you will probably receive a Division Order from them to set forth the percentage of revenue due your interest from the new well.
Todd M. Baker
John, One caveat to Todd’s comment would be if your original lease had a depth clause and the new zones were below the depth clause limits. You said “many years” so depending upon when that was, not many old leases had a depth clause. Most were for all zones.
The other caveat was if your were Force Pooled many years ago and the new zones were not included in the Force Pooling.
The statement from Limerock makes me believe that you have an old lease with no depth clause and therefore are held by the original lease, just as Todd said.