Leased but never drilled

I have a small mineral interest in Reeves County, Texas: BLK 13, SEC 189. It has been under lease now for almost 10 years, but no well has been drilled. Does anyone know what is going on there? I am wondering if I am somehow getting fleeced. It is puzzling and troubling to me that oil companies make good bonus payments for leases and then don’t drill. How does that benefit them?

Centennial has producing wells located in E/2 of Section 189. Permits show 400 acres, being E/2 (320) acres plus east 80 acres of W/2. If your minerals are located only in west 240 acres, then you would not be included in the Centennial wells. Look at the legal description in your most recent lease. If you post the legal description, then you can get more help.

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Is there any risk posed by posting the legal description? It’s a matter of public domain, right?

Your lease or a memorandum of lease was recorded in Reeves County deed records which will show your name and the gross acres in which you own a fractional interest. That is how the lessee protected its lease rights. A company wanting to lease will trace your title through all the predecessors into your name or name of your ownership entity. And once a well is producing, you will pay property taxes and your name and address will be listed on Reeves County tax website. Many ways to ultimately find you and your property. Sounds scary, but that is public info.


Okay, thanks! Here’s the legal description:

48.7080 acres of land, more or less, out of Survey No.189, Block 13, H&GN R.R. Survey, being 45.621 acres described as “Tract 2” in a certain Warranty Deed dated April 17, 1957, from G. M. Atwood and wife, Edna Lee Atwood, to Fred P. Armstrong, recorded in Volume 174, Page 467, of the Deed Records of Reeves County, Texas; PLUS 3.087 acres of land, more or less, lying within the right-of-way of State Highway 17, and being the same land described in a Right-of-Way conveyance dated November10, 1934 by Jacqueline Stamper Combs et vir in favor of the State of Texas, recorded in Volume78, Page 289, oI the Deed Records of Reeves County, Texas.


41.5880 acres of land, more or less, out of Survey No.189, Block13, H&GN R.R. Survey, being 39.726 acres described as “Tract 3”in a certain Warranty Deed dated April 17, 1957, from G. M. Atwood and wife, Edna Lee Atwood, to Fred P. Armstrong, recorded in Volume 174, Page 467, of the Deed Records of Reeves County, Texas; PLUS 1.862 acres, more or less, lying within the right-of-way of State Highway 17, and being part of that certain 3.087 acres described in a Right-of-Way conveyance dated November 10, 1934 by Norma M. Stamper in favor of the State of Texas, recorded in Volume 78, Page 355, of the Deed Records of Reeves County, Texas.

Containing 90.296 acres, more or less.

Looking at RRC GIS Viewer for Section 189, and road view, State Highway 17 runs parallel to and close to west side of Section 189, and inside the section. This would place your acreage in the western portion of Section 189 (west 240 acres) which is not included in the Centennial wells. There are wells in sections around your tract. Hopefully as oil prices rise, a company will take new leases and drill on your acreage.

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Centennial holds my current lease. They paid a hefty bonus for it. My payment combined with that of two cousins who own equal shares of this interest amounted to over a million dollars. We are already into the second half of their three year lease. I felt confident when we signed with Centennial that we would finally get a well after they invested that much money. However, as time passes so does my confidence.

As Tennis D. notes, your property runs along Hwy 17 and is sketched out in the attached map. Tract 3 is north of Tract 2. The descriptions are from the Reeves County deed book pages you referenced. The Reeves county books can be viewed online.



In Reeves County that’s not a small mineral interest.

Instead of hoping for a well to be spudded a lot of savvy mineral owners would picture that as the worse thing that could happen right now.

If the lease term expires before Centennial gets something started there, having the chance to collect another lease bonus could be a lot better outcome. Compare what your share of royalty from possibly just one well, that would have its peak early output at a time of relative low prices, but could end any future leasing of your acreage.

You mentioned being half way through a 3 year term. Hopefully that lease didn’t include an extension option. Maybe you already have the resources you will need to extract max value out of the next round of lease negotiations. But if not, using the time that’s left to get ready could be worth a lot.

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Yes, they have the option to renew, and getting that hefty bonus payment again would be great, but I have to wonder, how much longer can they afford to do that? Hoping for another lease bonus is kind of “iffy,” but a producing well is a sure thing.

A retired oil industry executive said this to me: “So, the area is under lease but no one drilled for 10 years? What is going on is the company drilled in the area and developed the oil. Once the reservoir nears completion, they need to make an economic decision to expand the drilling with a PDET (production exploratory well). They probably are not going to drill on the land until oil reaches over $ 100 bbl again. So, you have to ask yourself how much longer are they going to lease it?”

I don’t know if his statement holds validity or not. At any rate, the first eight years of bonus payments did not amount to much. I could certainly live without a producing well if the current leaseholder would pony up with our last bonus every three years. I can’t realistically see that happening, however. I understand that a well will eventually play out, but lease payments can’t last forever either.

What I was trying to say above is that as the reservoir is drained by the surrounding wells, the chances of re-leasing will dry up as well (if the retired oilman knows what he is talking about). Is this what is happening or am I just being overly paranoid?

Hi w e c…we have leased section 270/271 multiple times over a 20 year period with no well being drilled. We love the lease bonuses but would prefer wells be drilled. We leased again the same property in September of 2020 for 10k pnma. Oxy has applied for two wells, the young wells, for sections 270/271. We are ecstatic. Centennial leased section 38 for 15K PNMA, from us in 2018 and have drilled 7 wells on the property. Three new, shut in producers since the pandemic. Thought you might find our history leasing in Reeves County interesting. Good luck.



Just another free opinion, but I don’t think you need to worry that your lease is being drained by the wells currently around you and, assuming Reeves County continues to be a place oil companies want to drill wells, I think you should continue having the prospect of future leasing.

Sorry to hear your current lease includes an extension option, but assuming a decision to exercise that option will require Centennial to pay more years of bonus at your previous lease rate, that wouldn’t be a bad outcome. You’ll have a reading in 18 months on how Centennial views your part of that section. My guess is they will exercise the option to keep their lease block together, but a lot of things could influence their decision.

A couple of reasons I’m thinking your acreage may not have been included in a drilling unit yet is that Centennial only controls the acreage that is east of you. Noble controls the sections joining you on the north and the west, and Primexx has the section to the south. In the last couple of years Centennial and other Reeves operators have focused more on drilling long lateral wells, often extending more than 7000’ across two or more sections. The Noble Gunsmoke unit in the section north of you and the Primexx Nimitz unit that joins Section 189 on the south are examples of that. In 2016-17 when Centennial formed the Jaguar unit and drilled the three wells on the east side of Section 189 they were motivated about drilling wells with 4700’ laterals limited to the length of that single section. With companies now having the technology and judging they get more bang for their buck by drilling long lateral wells, and with drilling budgets reduced by the current market situation, those kind of one section wells moved further down the priority list. It doesn’t mean it’s bad acreage, it just doesn’t allow the flexibility they might have in other areas.

At the same time there’s been a shift in how companies view the optimum spacing of horizontal shale wells. Centennial drilled those three wells in the 400 acre Jaguar unit with laterals that were 400’, or less, apart from each other. If they were making the decision today I’m guessing Centennial would go with much wider spacing.

I’m attaching a link to the plat of the Jaguar unit so you can see what that spacing looks like. It’s also interesting that the Unit Boundary Breakdown on that plat shows Centennial Resources as the owner of the south half of that unit. If Centennial owns both the surface and the minerals on that 200 acres it could explain why they decided to have the Jaguar unit include only that 400 acre part of Section 189 instead of having it cover the whole 640 acres like operators more often do when their leases cover a full section. If you don’t already know the lease status of the mineral interest you don’t own on that 240 acres part Section 189 that wasn’t included in the Jaguar unit, it might be an interesting exercise to see what you can learn about those leases and to contact and exchange information with those other mineral owners who share your same situation.

I’d appreciate knowing other’s opinions about this, but I don’t think the suggestion you got that your acreage was being drained fits with your specific situation. There is established production on all four sides of your tract, with a possible question on what is happening to the north, but none of those existing wells appear to be close enough to have impact of the future production potential of your acreage.

If you look at that great layout of your location that PeterR posted, the Hogan well Clayton Williams (now Noble) drilled back in 2014 runs at angle across adjoining Section 148 to the west in a way that kept most of those perfs a long way from your interest. The two Nimitz wells Primexx completed in late 2019 in adjacent Section 188 have horizontal legs that terminate a good distance south of you, and the closest well Centennial drilled east of you in the Jaguar unit appears to be 3000’ from your acreage. On the north side Noble drilled a #2 well in their Gunsmoke Unit in 2018 with a 7000+ lateral that extended to the bottom of that adjoining section but according to RRC’s records it still unperforated and shut-in. Compare that to the spacing used on wells in lots of other parts of Reeves and, even based on today’s wider spacing standards, I think you’ll be able to picture that wells drilled in fractured shale don’t have huge drainage areas.

Keep the faith.

Reeves - Centennial Jaguar Unit.pdf (947.7 KB)


Rick5, thank you for those encouraging words–maybe there is hope. We (my cousins and I) are 500 miles away in East Texas. Is there any way that we can be informed/notified should Centennial begin drilling in our section? Do they have any responsibility or feel obligated to communicate with us with reference to drilling activity?

It’s pretty easy to look Centennial permit applications up on the Texas RRC. That’s where our attorney found out about the two Oxy permits. He told he how to look them up on the RRC site. Unless it’s stated in your lease language, I don’t think Centennial is obligated to inform you of their drilling plans. Me, I’ve been known to ask the person I leased to if he or she knows the Operators drilling schedule. Did you lease directly from Centennial or use a land man?


We turned the lease negotiations over to a lawyer, so he did all the communications after the initial contact. I don’t recall if he worked for Centenniial or if he was an independent landman, but I will look in my file to see if I can track him down. Thank you for the tip. I will give it a try.

Dusty1, thank you so much for your words of encouragement. You are obviously much savvier in these matters than I will ever be. And I do appreciate greatly your willingness to share your expertise with me.

My original motivation for posting this inquiry is the battle that I have been fighting with myself over whether I should sell this interest or retain it. About six months before leasing with Centennial I had negotiated a deal to sell it for a little in excess of $28K/acre. I had the contract in hand and was ready to sign, but then I contacted two local lawyers and both of them advised me not to sell.

Then Centennial came along and made me very happy with their bonus payment and made me optimistic that drilling would soon commence. But no well yet. And people continue to pound my mailbox with offers to buy. The battle continues to rage. I just need a knowledgeable observer who can tell me if my “no sell” strategy is right.

These oil companies really need an owners’ advocate to communicate with us on the status of our leases, to update us on when and if to expect drilling to take place, and to explain delays and such. I mean, after we sign the lease, we are just left in the dark as to what is going on.

You can observe qualified professionals (often with localized expertise) who provide services to mineral owners right here on The Mineral Rights Forum. You will notice them in 3 different instances on the site:

  • in display image ads and/or brief text messaging on site

  • in our Mineral Service Provider Directory in the main navigation above.

  • as a Business Member participating in many conversations throughout the site (note the blue colored “B” on their picture and blue text on their posts).

These practitioners are often able to provide the specific (and often localized) services that meet your needs.

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It would be nice if the operators had a representative, but they don’t because their plans are proprietary and competitive. Once the permit is filed, it is public data and is available on the Railroad Commission site for free. It really is up to the mineral owner to stay informed through watching the RRC (free), joining the forum here or joining the National Association of Royalty Owners and staying in touch with the local chapter. Learning how to look up the info and then filing with your paper data (and digitally) will really help you out (and your heirs). Also, monitor your operator’s investor’s presentations. Sometimes, they will brag about big plays that they are drilling. Monitor local newspapers and newsfeeds and they may have information.



You’ll find lots of opinions here on whether to sell or hold. For a sample go to the looking glass/search area at the top of this page and enter something like “should I sell or hold minerals in Reeves County?”.

I don’t think there is a “right” strategy for everyone. It depends on each mineral owner’s individual set of circumstances, viewpoints, risk tolerance and objectives. Since it may be years, perhaps generations, before anyone can truly judge which path yielded the best results, you need to make the choice you will be able to live with.

Understand also that selling or holding doesn’t have to be a 100% proposition. I expect many of the groups you are getting purchase offers from would be just as willing to buy 25 or 50% of your net mineral interest, and maybe selling part and keeping part would ease your mind.

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