Can anyone help with this question: If the leasing company wants to extend the lease period during a shut in period or a continuous production period that is not producing a royalty stream what is the common or normal minimum royalty payment that we should expect or ask for?
Ask for 25% always!
If a well is shut-in, then minimum royalty is usually srated in your lease. If you are extending primary term, then that is additional bonus. If you are in continuous drilling period, any amount due would usually be set out in your lease. To get any specific answer, you need to post a lot more detail about your lease terms, drilling situation and exactly what the oil company has told you.
Susan,
I suspect that the "shut-in" is a facade and that you are entitled to negotiate a new lease. If so, you can pretty much name your terms. Do so wisely. Your in an owner's market so understand the value of what you own.
Gary L Hutchinson
Gary,
Well stated.
Agreed with everyone that has commented. An Extension or an Amendment and Extension of an Oil and Gas Lease (own personal opinion) are bogus. If the language in your lease and this situation does in fact allow you to negotiate a new lease. Then you have the leverage. Use it.
Again, we don't know the details but myself and others on this board will help you. Just like so many have helped us in the past. The oil & gas industry has this negative reputation because of past and present things that occurs. But I guarantee, there are more good people both in the industry and on the mineral owner side than people believe. It's business but transparency I believe is the norm, not the exception.
I encourage you to join National Association of Royalty Owners ("NARO"). They are a good group of experienced oil & gas professionals to multi-generational mineral owners to new mineral owners.
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Gary,
This is important info I am reading but I am missing a bit of the basic foundational info I think. In my case, I am a minerals owner in Reeves County TX, recently had my lease option extended for two years.
If the company drills, it is not clear to me how this relates to the two-year lease extension.
Am I correct that if drilling takes place and they shut-in the well, I would be stuck in limbo with no possibility of further income (Example: new lease bonuses); stuck until the company decided to continue drilling operations and hopefully started producing? Time to review the lease, right?