If a person is unleased in a section that has a well, what should they do?
Do they just contact the operating company and let them know?
At that point, will the operating company give them a lease, or will they just receive payments without being leased?
Do the operating companies always contact every owner?
In the competition to lease Haynesville Shale minerals a number of companies got in too big a rush with too many inexperienced landmen. The result is numerous wells in units with open acreage. Operators would prefer to have every last square foot within a unit under lease. And you can lease anytime including after a well have been completed and turned to sales. There is also the option to participate as a Unleased Mineral Interest (UMI) under favorable state mineral regulations. For the vast majority of mineral owners, I think a lease is their best avenue. However, the lease terms are important to be matched with the specifics of the mineral tract. I suggest that you contact the unit operator and then send a certified letter with a copy of the deed or other conveyance by which you received your ownership interest. I would suggest that you let them offer a lease and then state that you will review it and get back to them. At that point I would suggest review by an experienced O&G attorney if the mineral interest is larger than 1% of the unit acreage.
Also, if the well is already producing and you choose to lease, make sure you get the lease back-dated so that you get all of the production.
I am seeing that some operators, namely CHK and HK are allowing smaller tracts and interests go unleased.
The benifit to the operator is that in this day of abysmal gas prices, many wells will never payout, many more will not pay out for a long time.
By allowing acreage to remain unleased they get to enhance their cash flow until payout, and also ( in my experiance with CHK) are able to operate you to death. for what CHK charges as monthly overhead alone is a sizable sum.
Ken, You did not give location of well. I think anyone will need this before giving any specific answers. A well may be in a given section but not in same production unit as the well. You did not say what formation well is in. It seems others have assumed the well is in Haynesville shale. I cannot make that assumption. If your land is in a production company is probably, and should be aware of your ownership. They pay lots of money to lawyers to do title searches. If you do own interest in unit and they have not located you, and they have no lease on your property your money will be escrowed until they find you or you contact them. Wells are sometimes drilled before units are set up. In this case the landowner who owns the land gets all the royalty until unit is established by Commissioner of Conservation. Some times wells, especially for shallow wells the first 4 or 5 wells may be drilled on a lease basis.
You would appear to have several options and I suggest you explore each one thoroughly before committing. I always advise going slow because once you sign lease it could remain in effect a hundred or more years. Therefore, I alwys say that this may be most important document you will ever sign.
Best of LUCK
I have a similar ?. A friend of mine purchased 5 acres with minerals 3+ years ago. The Vendor owned 100% of minerals and had previously signed a 3 yr OGL. The 2 yr extension option was sent by the Operator to my friend , who signed the extension.
A Haynesville Unit was formed, Haynesville Depth Well drilled, and has produced for over 18 months. The 5 acres lies within the Producing Unit.
Title and Transfer Deeds were mailed to Operator nearly 12 months ago. Numerous phone calls made-- still no check. The excuse is " yes, we recieved your deeds and title, but you should see my desk, your's is at the bottom of the stack & I'm working on it". My friend has consulted with an attorney, who is cordial but who is not aggressively persuing the matter ( possibley because atty fees would exceed or equal the production check ??) How does one Build a Fire under the Operator to get them to just take care of business? Any ideas??
Send a certified demand letter requesting that all royalties be paid in 30 days. make sure it goes by certified mail.
Even if they blow you off again, you will be in a better spot legally. Make the letter simple and to the point. Reference the well. Attach the unit order. Attach copy of aquisition deed.
Good Luck, let me know if I can help.
Assuming this is under lease as stated - In addition to Baron's good advice, specifically cite 31:173 et seq of the mineral code or at minimum state "in accordance with the Louisiana Mineral Code" in your notice. You don't want them saying you did not comply due to a technicality. Add return receipt to your certified letter, its worth the extra couple of bucks to ensure all notice requirements possible are met.
Wait 30 days from receipt date on return green slip for written response or resolution. Sometimes this notice will magically move your documents up the pile.
correction, 37:137, et seq.
Yes, the well is in LA. Section 12-12-13 and section 09-12-13 and many more.
I have contacted the company and they told me to send in the affidavit of heirship and the death certificate.
They said they will pay right out. My question is how do they know how much to pay me? And at what royalty
rate will they pay?? Can they not offer me a lease?
They do not have to lease you.
It is possible your tract is already leased, and the interest you have inheirited has been in escrow.
If you are unleased you will want to review the approprite discusions on this site about going UMI, there are quite a few.
so What will the royalty rate be? Will it be what the leased owners have?