Payment of Lease Extension

We signed a 3 years lease with a 2 year extension option. According to members on this site an oil well has been spud and started producing. We are 15 days out from the primary lease expiring. We will receive another payment for the 2 year lease or do they not have to pay that since there is a well and it is in the process of producing? We have not receive a division order or any notification regarding the lease. If we don’t receive an extension bonus is the lease still in effect or not?

If your acreage is included in the well, your acreage will be held by production and you will not receive further bonus payments. You don’t include any information so I don’t know when the well started producing but in general it can take many months before you see payments. A division order will come first but even that can take awhile.

M Smith, just went through something similar. We found out because our lease was a couple of months out from ending so we began to ask questions. Our experience was that we did not get a lease extension as production had begun but only on 1/2 of our acreage. Once the well started producing, it is now under the division order for however long it produces. So that’s why you need a lawyer to track this down (we use Wade Caldwell after discussion and help from on this site like Buzz) . It took about 6 weeks to sort out but all is well now except we do not have a lease yet on the other half. We started by calling the oil company office first to determine the status and the landman involved as we found out our lease had been sold and we didn’t know that either. The oil company did not want to lease the other acres. In our case, production had been going on for a year, no division order. Our royalties were being held in an account.


As you can our acreage is Section 68, Block 4 #3260 and according to this map there are 2 horizontal wells running through it. I can’t seem to figure out the site to know what is currently in production or not. I was told the Shadrach well is not producing but can’t pull anything up on it. The lateral lines of that go through the top part of our abstract so I guess we may be included in that division order? I am not sure how that works. The other two horizontal wells are the Fiery Furnace Api 389-36330 AND 389-36355. When I pull those up they don’t show any records that are dated beyond late 2017. So how would I know if there are or are not doing anything with those?

As near as I can discover, both Fiery Furnace wells have been cancelled. One Shadrach well was spud on Jan. 4 of this year. The other Shadrach well does not appear to have been spud yet. There is no completion date yet for the Shadrach well that has been spud but it can take companies a long time to get around to filing that info. I can see no production numbers listed anywhere yet. But that is not unusual. And oil prices aren’t great at this moment so the company might not be in a hurry to start production. The well includes the entire section so you should be included.

I completely understand your impatience - we’ve been there too! But these things just work out in their own time.

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When I look at the map that covers Shadrach it has a blue dashed line that seems to cut the entire section in half. I think the paperwork shows that well is 300+ acres. Our acreage is not in that area and just outside the dashed line. The fiery furnaces do go directly through ours. So I assume if they don’t move forward with them we are totally out of luck?

There are two sets of paperwork on the Shadrach wells. Below is the plat for the well that has been spud. Here’s a link to the drilling permit, which shows spud date, acreage (647.97), and includes links at the bottom for additional paperwork. In that linked paperwork is the plat document I’ve already attached as well as the paperwork cancelling the Fiery Furnace wells.

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You are awesome! Thanks for the help:)

Dear M_Smith,

In all likelihood, an extension payment is not due. HOWEVER, nobody could say for certain unless the lease and all other pertinent documents were examined (such as a pooling declaration).

The devil is in the details. There is a risk to putting all your faith in those who make blanket statements as to what is likely, but they present it as fact. Without all of the facts, everything else is supposition. It’s like Facebook lawyers.


Buddy Cotten

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Mr. Cotton, thank you for correcting me. You know waaaaay more than I.