Re-leasing after shut-in

We leased our land over 3 years ago they did drill and well was productive for a few months and now it is shut-in, my question is since it is shut in can I lease my land to someone new now?

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Permalink Reply by Skip Peel- Independent Landman on October 17, 2011 at 4:04pm
Check you lease language.  There should be a clause addressing shut in.  There is usually a payment amount per acre and a time period that they payment can hold the lease rights.  As long as the payments are made and the well is not shut in for a period exceeding that specified in the lease, the lease is in force.
Permalink Reply by coral on October 17, 2011 at 5:03pm
I can't find our original lease and the one I requested from the parish doesn't have anything regarding that on it. any suggestions of what to do now??
Permalink Reply by Skip Peel- Independent Landman on October 17, 2011 at 5:08pm
If there is no specific lease language addressing shut in then it is an non-standard lease form and you will have to consult an O&G attorney.
Permalink Reply by The_Baron on October 18, 2011 at 9:10am

Its probally in there. You may have just gotten a lease memorandum if you got it from the courthouse.

 

Oil and Gas leases are important documents, you need to get a true copy. Call the operator and see if they have a copy, but look harder first.

Permalink Reply by coral on October 18, 2011 at 10:24am
Yes it was a memorandum they sent us, I knew there had to be more to it than what was on there.
Permalink Reply by Geologist on October 20, 2011 at 3:11pm

Has anyone asked to lease your land?  If so then that means they (probably) have checked into the title and lease status before approaching you.  How long was it shut in?  There could be a continued operations clause in the lease.  Also, you need to find out the length (ie. 3 yrs) of the lease and exactly what it covers and if it has any provisions for the amount of land it holds.  In Texas you can go up to the Abstract office and pull copies of leases.  You might can do this in other states as well.

Permalink Reply by The_Baron on October 21, 2011 at 8:50am

Jennifer,

 

In Louisiana you can file a memorandum that only needs to include the term, land description, and lessor & lessee's names.

 

The memo does not have to have any other clauses or even the royalty. The lease is thus kept private between the parties. Bottomn line, keep your leases safe, just as you would with a car title.

Permalink Reply by JMan on October 20, 2011 at 3:13pm
I would bet a dollar to a donut that you cannot lease with somebody new.  They will more than likely have to pay you a shut in royalty fee.  This is extremely common practice for the industry unfortunately.
Permalink Reply by The_Baron on October 21, 2011 at 8:51am

"This is extremely common practice for the industry unfortunately."

 

Why is shut in policies unfortunate? There are many reasons to shut in a well. The operator will want to get paid as much as the RI. If you don't like the shut in terms, don't sign the lease!

Permalink Reply by JMan on October 24, 2011 at 8:10am
because companies will open the well back up just before the lease expires so they can hold it by production.  This means they are just tagging you along so another company can't get the lease and actually develope the land.
Permalink Reply by The_Baron on October 24, 2011 at 8:51am
so you imply that an operator will spend millions of dollars to drill a well, only to shut it in? I disagree. usually it is an infrastructure or supply problem.
Permalink Reply by Geologist on October 24, 2011 at 8:59am
I disagree with that.  Sometimes a company doesn't have an infrastructure problem and just wants to hold the lease for future potential.  Sometimes the operating costs are too high to justify operating but the well is productive enough to be held for when prices are higher or technology has increased.

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