We signed a lease with PetroHawk on July 24, 2010. The lease was a 3 year lease with a two year extension. The lease expires soon, and I was wondering if we had to sign a new lease with the current company holding the lease, or do we have an option to sign with another company. Basically I want to know what happens now and what kind options are available to us???? I know each lease is different but what normally happens after a 5 year lease? Any advise is appreciated.
Thanks, Trinidad
did you get the 2 year extension? you should have gotten paid for that also, if you did not get paid again in July of 13, your lease expired in 13.
If you got paid in July, 13 then your lease will most likely expire in July,15.
My advise start shopping your land around, but with the cost of oil in might be tough.
Trinidad,
My family and I have been down this road before! If the primary term and the option term of the lease have expired. The oil company has no further obligations to you. However, You should have received two(2) bonus payments during the 5-year lease duration. A bonus payment at the beginning of the 3-year term and another bonus payment at the start of the 2-year option, if it was exercised by the oil company. If these things occurred, your mineral rights are now free of a lease. The company will contact you or you can contact the company to determine if they want to re-lease your mineral rights. Basically, at the end of the 5th year your mineral rights are "lease free". You can now lease to any company that you desire. Unless they drill and find oil/gas before end date of the current 5-year lease. Good luck!
Petrohawk is now part of BHP Billiton. Once the lease expires, you can sign a new lease with any company. Sometimes you will be approached by a 3rd parry company for a "top lease." The top lease only becomes effective if and when the existing lease expires. Many people do not like top leases and prefer to wait until the current lease expires. If your current lease expires later this year, be sure to ask BHP to record a release in order to clear your title. This makes it easier to lease in the long run.
Thanks for the information, this is Trinidad, BHP handed our lease to Conoco who owns it now.
I forgot to mention that Conoco is still is still producing oil there. not much but still working there.
does this change the 5/2 year lease ? Will Conoco gives us a new lease, or other companies will ?
We know now by reading this forum not to sign a 5/2 anymore. that landman caught us without knowing
anything about leaseing our grandparents small ranch. that is why we are worried
Don't worry about it. When you aren't in the business, it is difficult to know how to frame your question.
From what I can tell, your lease may be held by production. The usual lease reads 3 to 5 years, or AS LONG AS IS PRODUCING.
If a title searcher or landman satisfies themselves that your lease is held by a producing well, they will not contact you regarding a new lease. If you try to market it, and they do their due diligence, finding that your lease is held by production, they will lose any interest in making you an offer unless there is a release of 100 feet below the stratigraphic equivalent of the deepest well drilled, or something like that. In that case, assuming deep rights only interests them.
From what you have written, your lease is HBP, or held by production. The information that you omitted regarding production was huge.
Thank you, all of you. Willard, Jimmy, Tennis, Dave and MRF for helping us understand a little bit about an
oil lease. I read the lease and we did sign a 5/2 and as long as production lease. Was that wrong or is that common. It does not say anything about depth. How does depth come in play.
Trinidad
Dave Quincy said:
Don't worry about it. When you aren't in the business, it is difficult to know how to frame your question.
From what I can tell, your lease may be held by production. The usual lease reads 3 to 5 years, or AS LONG AS IS PRODUCING.
If a title searcher or landman satisfies themselves that your lease is held by a producing well, they will not contact you regarding a new lease. If you try to market it, and they do their due diligence, finding that your lease is held by production, they will lose any interest in making you an offer unless there is a release of 100 feet below the stratigraphic equivalent of the deepest well drilled, or something like that. In that case, assuming deep rights only interests them.
From what you have written, your lease is HBP, or held by production. The information that you omitted regarding production was huge.
There would be no reason for anyone to spend the money to acquire leases and then develop and produce oil and gas if they had to give the lease up after the end of the primary term, when they had drilled a producing well. What would be the point?
If the well that you have referenced is still producing on the land you leased at the end of the primary term, or July 24, you may consider it to be held by production as to all depths if there is nothing in the original lease that releases any particular strata.
I think all your questions have been answered by those who volunteered to chime in.
Good luck to you.