I inherited an old lease with a HBP clause. There used to be a prolific well which the original lessee took a working interest in after leasing the minerals from the owners, but the well has not produced for a very long time - well past the time period given in the HBP clause. The well is still listed as “producing” by the Alabama OGB though records show no actual production in over a year (this is not a result of 2020’s demand drop). The clause in the lease clearly states “as long as … produced” and not “capable of production.” I’m still being billed by the operator for things like road maintenance and utilities and am not able to get much out of them as far as what’s going on with the well, but they acknowledge that the lease has expired and say that we are still working interest owners. How is that possible if we have no rightful claim to the minerals themselves? I’ve been trying to read through anything I can find on this subject but most resources seem to assume that the lessee in this situation is the operator. Thanks everyone for your time and any advice in filling in the gaps in my knowledge.
Are you a mineral owner of a property that once was leased, or did you inherit a lease of someone else’s minerals? In other words, which side of the lease are/were you on? Typically people who inherit ownership in wells are mineral owners who have leased to an operator.
I inherited a lease of someone else’s minerals. We paid royalties to the owners while the well was producing, but we were never the operators of the well.
You are a working interest owner until the well is plugged and abandoned. You may not be the operator, but you should read the Joint operating agreement or contact the operator and ask what their plans are and see when they plan to plug and why they are dragging it out.
Being a non-operating working interest owner is unfortunately the short end of the stick, with limited power to force the operator to do anything. Do you have other producing wells with this operator? Or is this the only one? This is not legal or financial advice…but look into the recourse they can take if you simply don’t pay. (*if they’re unfairly/unethically stringing you along…if it’s all fair then you should morally pay)
Thank you so much! Yes, I have the JOA out right now for perusal. I just wanted to make sure that I am in fact still a working interest owner. I know I’d be out of any future wells unless I signed a new lease with the owners; I just wasn’t sure about this one. I appreciate the input!
Thank you for your response! This is the only one. I’m currently perusing the JOA and the JIB detail as to what I can be charged for and what information I’m entitled to, but these are relatively small charges and I don’t have any issue with maintaining my responsibilities as a working interest owner - I just wanted to make sure that I’m actually still a working interest owner in this well even though my lease has expired, which I know means I’d have no interest in any future wells. I appreciate the input!