I have several terms in my lease that I am trying to understand and a few are Shut-in and Shut-in Limitation. Is this a benefit for me to have. From what I understand it deals with my royalties but I do not fully understand it.
Hi Ms Payne,
My first question is, have you executed the lease yet? If you have executed the lease, your question quickly becomes academic…
Generally speaking, shut in royalties are royalties paid in lieu of actual production. These royalties are generally paid for lack of a market.
Limitation on shut-ins are generally to the advantage of the Lessor.
Having said all of that, the lease form rules over any generic explanation.
If you would care to upload or transcribe the portion of your lease form that has to do is shut in royalties, we can give you an answer with much more precision.