If an operator acquires minerals on a lease which has an old plugged and abandoned well on the property and in turn re-enters the well, produces a small amount of oil from this well, does this constitute the lease being held by production? Would the lease wording be the key to this answer?
The lease wording is key, and depending on that, the operator’s costs versus amount produced is also key.
Since you said this well was plugged and abandoned, then at some point in time it obviously did not produce, at which time the landowner came to terminate the lease whenever they want to. There is a term called tenancy at will. And no, don’t take my word for it, but you might want to take the judge’s word for it in the following case.
Thank you to the law office of Houston Harbaugh who have this information on their website
The Court further observed that a “tenancy at will” can be terminated at any time by the landowner and that the Wilsons were well within their rights to now terminate the 1920 Lease. As such, the Court granted the Wilsons’ Motion for Summary Judgment and declared that the 1920 Lease was “terminated and no longer valid.”
Klaus:
Thanks for the interesting article. The well which I refer to in my post was plugged and abandoned in 2001. The records indicate very little production and at the time, most likely was not cost effective to maintain.
Klaus Balkenhol said:
Since you said this well was plugged and abandoned, then at some point in time it obviously did not produce, at which time the landowner came to terminate the lease whenever they want to. There is a term called tenancy at will. And no, don’t take my word for it, but you might want to take the judge’s word for it in the following case.
Thank you to the law office of Houston Harbaugh who have this information on their website
The Court further observed that a “tenancy at will” can be terminated at any time by the landowner and that the Wilsons were well within their rights to now terminate the 1920 Lease. As such, the Court granted the Wilsons’ Motion for Summary Judgment and declared that the 1920 Lease was “terminated and no longer valid.”
It also depends what state you are in.
Ben:
Thanks for your replies. The minerals are located in MT. This scenario has not occurred but I was just wondering “what if” as many leases have P&A’d wells.
Ben Elmore said:
It also depends what state you are in.
Charles,
Could you explain what a P&A’D well is for some of the Forum members that might not know? Thank you sir.
Oh, by the way, I’m about ready for that cup of coffee.
charles s mallory said:
Ben:
Thanks for your replies. The minerals are located in MT. This scenario has not occurred but I was just wondering “what if” as many leases have P&A’d wells.
Ben Elmore said:
It also depends what state you are in.
P & A’d is short for plugged and abandoned wells. This is normally the result of either a dry hole or declining production whereas the cost to maintain the well is more than the well makes “money wise”.
Charles,
Thank you sir for your P & D’d answer and also thank you for all your knowledge and help to the Forum members. Ben I’m certainly not going to leave you out. Also thanks to you for your help. Thanks also Kenny Dubose for making this Forum possible.