Lease nearly up, drilling now planned

Texas Mineral Rights Reeves County, TX
#1

We leased our tract in Reeves County on August 24, 2006 (five year lease). The lease has 'passed' from the original lessee to a second, and now to a third. No activity at all other than delay payments which have been timely made.

I assume that this lease, absent any meaningful activity, will expire at midnight on August 23, 2011 (the lease document is silent on this point). Is this correct? (this is my first question).

We received a letter - this week - from the third operating company citing this lease and stating that "we will soon be drilling on this property".

My second question: What has to happen regarding notification or activity in order to move the lease into a 'continuing operation' phase where it does NOT expire on August 23 of this year? Is the letter we received sufficient? Or if a truck is parked on the property sufficient? Or does dirt have to fly? Or just what?

Any clarification would be greatly appreciated.

#2

Bob- I'm really unsure about your first question, but I can see how the answer could affect your second question. As to operations, I would urge you to get the advice of an attorney as soon as possible. The level of activity necessary to perpetuate the lease depends on the language contained in your lease. There can be a big difference between "continuous drilling operations" and "continuous drilling". That has to be really upsetting to have them coming in at the 11th hour saying they're going to drill. You might check the Railroad Commission records and see if they have applied for a permit. But I would try to find a good oil and gas attorney as quickly as possible.

Lori

#3

Looks as though my questions are moot. I had checked the RRC records last week and found nothing but today it shows a permit application "Submitted 07/08/2011 Approved 07/13/2011" - apparently took a while to get the web site updated.

SO now to see when the drilling rig shows up.

This is probably just "business as usual" - and is of course what all we mineral rights holders WANT to happen.

Thanks, Lori, for your kind advice - I intend to visit our property (we are a couple hundred miles away) next week to see what's going on.

This could get exciting.

#4



Bob Owen said:

Update: Visited the area on 8/3 and 8/4. There is a drilling rig working away. The crew says that they moved on location about 7/22 and as of 8/3 were at 3000 feet, moving down. Expect to drill to at least 10,000 feet.

This is about 14 miles S of Pecos, two miles west of Hwy 17. On the RRC Reeves County map, these are in the quads "Worsham" and "Verhalen North".

#5