We have found ourselves in a situation wherein our 5-yr lease with Cimarex expires 7/15/15 but will apparently continue rent-free due to being included in a Unit Agmt that not only were we not involved with, but we didn't know anything about it until the executed copy arrived in the mail. Not liking that much! Has anyone else been involved in this type of situation or have heard of it happening? Thanks! Lea
1105-REEVESCOUNTYLEASE.pdf (1.06 MB) 1106-UNITAGMT.pdf (877 KB)Lea,
The UA provides for an initial 4 well commitment, and thereafter, Cimarex must present a Development Plan on or before 12/31/14. You might try calling the GLO and getting a copy of the Development Plan to see if your Section is part of this year's plan. Since your land is mineral classified, you are at the mercy of the GLO, as they are the owners of the minerals. The landowner has no say in the right to pool/unitize mineral classified lands.
You are possibly missing out on an additional bonus payment, but on the bright side, you should get a well drilled eventually..assuming Cimarex fully develops the Unit.
Thanks so much for the response. While we are both the owners of the soil and mineral rights, I understand that we really don't have any say in a thing like a UA. I just spoke with our guy at Cimarex who updated me and we hope to have a well early NEXT year. It is just kinda irksome that we had to continue the lease rent-free but in a way it's good that the state obviously believes that the payoff down the road would greatly offset any miserly little rental fee! Again, thanks Mike!
Lea, This is mineral classified land. You own the surface (soil) and the State of Texas owns 100% of the minerals. You act as agent on behalf of the State in negotiating the lease and in return, receive 1/2 of the bonus, delay rentals and royalties. As owner of the minerals and under the terms of the lease, the State alone has the power to agree to a unit and to set the terms and conditions. I have been in a property where the State is allowing the oil company to drill multiple wells over several years to "earn" all the acreage. However, if the oil company does not fully develop the unit acreage, then it only earns a set number of acres per well and has to release the remaining undrilled acreage. This is not a bad situation as generally a unit will be fully held by the first well drilled.