Held by Production

Oil and Gas Leasing Help
1

if a piece of property is held by production (HBp), then a. Shouldn't I be receiving royalties and b. How long after production ceases is it no longer HBP?

Thanks for any help,

Gregg Heath

2

Gregg:

The answer to (a) is not necessarily. You need to refer to your lease agreement (terms) which should answer your questions.

3

Thanks Charles. I inherited rights in 20 different counties in OK about 6 years ago. I thought I’d nailed down all of the lease holders and Production companies but found a parcel that shows HBP and I have no record of a lease or royalty payments. Last year I was contacted boy a production company to let me know they had six years of royalty payments that were held in abeyance. Nice surprise but it made me want to track down any other royalties that maybe weren’t paid. Thanks again

charles s mallory said:

Gregg:

The answer to (a) is not necessarily. You need to refer to your lease agreement (terms) which should answer your questions.

4

Yeah, there is not enough information here to give you a good answer. I have seen several cases where a piece of land (Tract A) was leased, none of it was drilled or included in a drilling unit, because OTHER lands were leased and some part of any of those lands WAS drilled or included in a drilling unit and because there was NO Pugh Clause, Tract A was HBP until the lease terms expired as to the other tracts. So Charles is correct, answer to A is not necessarily. And answer to B depends upon lease terms, acreage leased, and status of production on all Leased Premises.