"Held By Production " Mystery

As I've posted previously, we leased land in two sections in the Bakken in eastern Montana only to have our sight drafts cancelled a month ago as the land was "held by production." I'm waiting for a copy of my parents' 1980 lease, but I believe it will have leased all their land--in secs 26, 27, & 35--without a Pugh Clause. So of course the low-producing vertical on section 35 that's been continuously operating since 1986 will have tied up 26 & 27 too.

But here's the mystery: an oil company leased 26 & 27 from us 2006-2009. When I phoned them they said they had no evidence that the sections were HBP. Second part of mystery--I phoned the operator of the Section 35 well. The operator said that when they took over production from another company in 2001 they were only assigned section 35. So then I phoned the operator before that, who acquired it sometime in the 1990s. No, they were only assigned section 35 when they took over the well. I'm not sure who operated it before them; the woman in the office sent me a lease data sheet that shows a dizzying number of oil companies who have had an interest in the well.

If if there are any legal minds out there--could one of the early operators of the well have long ago severed secs 26 and 27 from the section 35 well when they assigned the well to another company? Can this former operator still "hold by production" secs 26 and 27 if the current operator of the well does not have them?

And is there any kind of database that will tell who is holding land by production?

Thank you!

My opinion (not from an attorney) is that all the details are just needless clutter. If the original lease contained no Pugh clause and there is indeed current production on any part of the property, or it has been consolidated into a drilling unit, you are HBP. No production - no problem. Existing production - no current acreage available to lease.


Have you been able to take a look at the Montana Board of Oil and Gas website? They have an application that will allow you to search for oil and gas production by well (http://bogc.dnrc.mt.gov/onlinedata.asp). You can search for wells by section, so it should be relatively easy to determine if a well in sections 26 and 27 have been continuously producing. When you access this database, it asks for a password (it shows a username as "public") - just click on "login" without entering a password and it will take you to the database. Good luck.