After Lease is up ... Can you come out ok if you dont release?

I currently have leased with a company for the most part has been fair and on time with my royalty checks my well is the arrowhead federal twn 21 rg 59 sec 26 i have been reading alot that slawson the company who i leased with has been doing experimental drilling in the upper layers of the bakken my cks have fluctuated quite a bit ranging from upwards of 500.00 per month to less than 100.00 last check and they just started to drill under 8 mths ago so my question is after the 3 yr lease is up what if any is the advantage of not re-leasing with any company do they just by-pass you if you are the only one holding out i do only have 6 acres in a 160 acre plot i get 18% royalty any and all input would be helpfull thank you

Not familiar enough to know. Is that township in Montana or North Dakota?

You'd likely be "Forced Pooled" if you don't lease and they end up drilling in your section.

Are you referring to the producing tract? If so there will be no expiration of lease and no need for a new lease until production ceases (depending on your lease or if you are referring to tracts that you own that the lease will expire on because of a pugh clause, etc.). Your 3 year lease your speaking of would be the primary part of the lease which has no bearing in your case as you are beyond that with a producing well. If your speaking of another tract you mentioned they started to drill 8 months ago, it would also be past the primary portion of the lease, or is it the same well or were you referring to the experimental Bakken drilling as being just started 8 months ago? It is impossible for anyone to understand from what you wrote if you have 3 tracts, 1 producing, 1 with a new well and 1 not drilled or producing but is leased, or if this is all one tract with a new well or what you mean. Only you can understand what you mean, we can only try to understand from what you wrote what you really meant, which I am certain are not the same.

I apologize for the lack of knowledgeable words or terms to describe my situation i have 6 acres in richland co mt the section is twn21 range59 sec26 name of well is arrowhead federal h-26 my question was Slawson the company who i signed the lease with has picked 5 wells to do experimental drilling on to ck the producing capacity of the upper bakken i guess my question was i am not understanding why the production numbers which were not that high to begin with have dropped so much in a 1 mth period when the first 6 mths or so they stayed about the same as far as my royalty payment and after the first 3 yrs which the lease is for now 2 yrs left what are the pros and cons of resigning a new lease with them. i thank each and everyone for your advice and i hope i dont sound to foolish i am so new to this it is rather confusing at times thank you again Theresa.

Ms. Hennen, I think you gave me enough to make some supposition. Verticle Bakken wells generally don't do well, the fact that you had been getting checks for 6 months tells me that most likely the wells is a horizontal well and probably holds at least a section by production, the section your minerals are in. Wells have downtime, sometimes to allow pressure to rebuild underground and the wellbore to refill with oil that will be pushed to the surface by pressure. The operator could also have shut down the well to install a pump. The operator may shut a well down because they or someone else is fracking a well nearby. Wells do not operate 24-7-day and 30 days per month. Read your lease, the operator may not send you checks for less than the amount of $100, you may get a check for two months production next month. As mineral owners we are mostly kept in the dark and even for me it takes time to find out what is going on and I have had some experience. The information I follow runs about 2 months behind what is actually happening so I have learned not to worry about things until they start to show a trend. I'm going to suggest that you try to be patient for about 2 months and see if things have changed. You could start learning a bit from the mineral help at the header of this page. I wouldn't make a career of it for 6 acres but it may take some of the mystery out of oil and gas.

Theresa Hennen said:

I apologize for the lack of knowledgeable words or terms to describe my situation i have 6 acres in richland co mt the section is twn21 range59 sec26 name of well is arrowhead federal h-26 my question was Slawson the company who i signed the lease with has picked 5 wells to do experimental drilling on to ck the producing capacity of the upper bakken i guess my question was i am not understanding why the production numbers which were not that high to begin with have dropped so much in a 1 mth period when the first 6 mths or so they stayed about the same as far as my royalty payment and after the first 3 yrs which the lease is for now 2 yrs left what are the pros and cons of resigning a new lease with them. i thank each and everyone for your advice and i hope i dont sound to foolish i am so new to this it is rather confusing at times thank you again Theresa.

Theresa,

Below is the production data from your one well. There is only one well and it is a horizontal well. The production hasn't gone down that much from first production of 2243 to 1530 in Sept, compared to other horizontal wells it's normal. So without looking at your revenue checks I wouldn't know why your checks have gone down to where you are only getting 1/5th of what you were. There was one month where they only produced for 18 days but still production was only a little under 1/2 of original first production. What it might have been is they only sold 1/5th of the amount of oil one month and the next month they will sell more. Like in August when it only produced 1021 barrels they might have only sold a part of it like 500 barrels and next month they may sell 2500 barrels. They will normally bring a horizontal well online slow and then it will eventually start it's decline just like your well is doing.

As for your 3 year lease and whether to re-lease, your mineral interest is held by production and held by the lease you signed as long as there is production (depending on the terms of your lease), there will be no expiration of your lease as long as the well produces and or they pay you a shut in royalty.

API # Dt Report Formation Lease # Bbls Oil Mcf Gas Bbls Wtr Days Prod
25083229010000 9/30/2012 Bakken 8499 1530 300 1838 30
25083229010000 8/31/2012 Bakken 8499 1021 180 2003 18
25083229010000 7/31/2012 Bakken 8499 2253 310 2393 31
25083229010000 6/30/2012 Bakken 8499 2004 300 2500 30
25083229010000 5/31/2012 Bakken 8499 3924 310 5621 31
25083229010000 4/30/2012 Bakken 8499 1875 300 1749 30
25083229010000 3/31/2012 Bakken 8499 2243 180 5551 18

Again thank you to every one who posted on my behalf, i think i got the just of it but i am still confused as to my 3 year lease which i thought would be up in 2 years as i signed it approx 1 yr ago so as long as they are producing they continue to have the rights to the minerals? what is the point of having a 3 or 5 yr lease? Thank you again Theresa

Theresa, it gives the lessee a delay in time before they must begin to drill the well. Most wells are drilled years after the lease is signed. It just happened that your well was drilled soon after you signed. The lessee / operator had probably been working towards putting in your well for over a year before you signed the lease.Theresa Hennen said:

Again thank you to every one who posted on my behalf, i think i got the just of it but i am still confused as to my 3 year lease which i thought would be up in 2 years as i signed it approx 1 yr ago so as long as they are producing they continue to have the rights to the minerals? what is the point of having a 3 or 5 yr lease? Thank you again Theresa

Thank you Mr Kennedy but im sorry im still confused i have read over the lease and what i thought i was signing was for a 3 yr term and at the end of the 3 yrs i had the option to re-sign if so desired with them or another company if the companies also desired again you mentioned that the end of the 3 yrs is for a delay if you could explain it to me again i would appreciate it thank you so much Theresa

Theresa,

Did you read your lease at all?

You signed a multi-term lease, it's not just a 3 or 5 year lease people sign, the 3 or 5 year term is only a small part of your overall terms of the lease. You are pulling out one term out of the lease without looking at and understanding the full meaning of your lease. Think about it, do you really think anyone would lease your minerals for 3 years, drill a 4 million dollar well and then walk away if you decided you didn't want to lease any longer, everyone one would say get lost and then have a multimillion dollar well for free, not even free as they would have paid you a bonus to let them drill you a free well, doesn't make any sense. With every contract or agreement there are normally many conditions and defined agreements within, the 3 year primary is only one of those and if you read your lease it will state that your lease moved beyond the 3 year term portion of your lease agreement when they drilled a producing well. Like I said, common sense would tell you no one would drill multimillion dollar well if they could not control ownership of it afterwards. I take it from your questions and misunderstanding that you haven't even read your entire lease as it states in it just what I have been saying, DID YOU READ YOUR LEASE?

SHALL REMAIN IN FORCE FOR 3 YEARS AND AS LONG THEREAFTER AS OIL OR GAS IS PRODUCED FROM SAID LANDS

Read before you sign anything. Don't understand something, read the instructions.

You are wrong I did read my lease

but apparently did not fully understand it I do thank you for your info