We leased our minerals in 2000, a well produced until 2013 when our Operator allowed the leases to be lost for lack of production. A lapse of 9 months no production, then began the well producing again. Now they want to offer to extend the lease 6 months. I would guess to rework the well. Our original lease was for the entire 350 gr and nearly 80 nma that we own in this section, and we were paid on the 80 nma. Today, in their offer they want to pay bonus only on the 17 nma in the 160 quater that composes the Unit where the well is located.
Our only way to benefit financially is from bonus, as we own no royalty. While it’s true, any offer is better than no offer at all, it has me wondering:
Is this typical, standard practice for an Operator to base his offer on only what he wants or needs?
Or in asking to extend the original, should it be based on the original NMA’s?
Sounds to me like they were stealing minerals. I would act accordingly. We aren't talking a contract dispute. The contract had ended and then yet more minerals were removed.
I remember Mr. Larman's previous posts.
I appreciate your observations, but we are kinda getting off topic. They wouldn’t be offering money to extend a lease Unless the operator himself knew he had lost the lease for lack of production. Our lease stipulates 180 days no production, blah blah blah and they know it. Why they have done, and are now doing what they are (on and off production ), I can’t answer.
What I do know is the production numbers are very low, they’ve had a new Title Opinion drawn up etc etc, so my assumption would be they are planning to go to another formation and want to protect themselves after a 12 year run on a now trickling well.
Now, back to my question about being paid, which NMA, the 80 in our Section or only 17 they now need? In our original leases they took them all.
Mr. Larman,
You might wish to contact an attorney now. Depending on the state, you could be held liable by the royalty owners for failing to act in their best interests , especially since you own no royalty.
Whether on purpose or intentionally, owning the executive rights to me is akin to being the executor of a will. While at one time it was considered an honor, the risk of litigation by second guessing royalty owners is too great for no benefit to speak of.
Best
Buddy Cotten
Thank you Mr Cotton. I’ve read many of your comments over the last year or so. You are one person that I have a lot of respect for and highly value your opinion.
Obviously, we’d like to be paid again on the original 80 nma since they want to extend the ORIGINAL lease and the 80 nma was a part of it. Something is better than nothing, so sometimes in life you take what you can get. Sure, you can play hardball, end up with nothing and as Mr Cotton suggests, may get more than you bargained for.
My question was simply to ask if it would be typical for an operator to, in asking to extend the ORIGINAL lease, only want to pay on the part of the leased minerals he now wants?
That isn't what they are doing. If they are wanting to extend the original lease, the gross acres would be the same. The offer is for a different gross, so therefore, they are not asking to extend the orignal lease. It sounds more like a new six month lease. They are now only wanting to lease the quarter section now where the well is. The question has already been answered. I'm sorry that you were disappointed.
Ok, I guess I misunderstood what he was saying on the phone when the Landman said to me " we’d like to offer you $$$ to extend your lease 6 months". This was a brief phone conversation, nothing in writing. I was only thinking about them wanting to extend our previous lease with its terms. I suppose what you suggest would make more sense. We’ll see what they come back with. Thanks for your thoughts.
Dave Quincy said:
That isn’t what they are doing. If they are wanting to extend the original lease, the gross acres would be the same. The offer is for a different gross, so therefore, they are not asking to extend the orignal lease. It sounds more like a new six month lease. They are now only wanting to lease the quarter section now where the well is. The question has already been answered. I’m sorry that you were disappointed.