A question from a new mineral rights holder in Preston County, WV. A check came for the shut-in gas royalty. It was dated for the duration of one year. Can anyone tell me exactly what this means? I know that there is a well and it is being drilled. There is also a pipeline that is being built to transport this up to PA and else where.
So what do you think? I need some insight here
Thank you,
Beth
Read your lease form.
Typically wells are shut in when awaiting a market. If there is production, then you are entitled to royalty. So you have production and no market. This is a payment in lieu of production royalty. Typically modest payment to hold the lease while awaiting connection.
I guarantee that the pipeline company is getting leaned on to promptly complete the line so that the operator can sell the product instead of hemorrhaging money.
Thank you for the information. I thought it was something like that but it was good to hear from someone who is in the know!
Thank you. Beth
Buddy Cotten said:
Read your lease form.
Typically wells are shut in when awaiting a market. If there is production, then you are entitled to royalty. So you have production and no market. This is a payment in lieu of production royalty. Typically modest payment to hold the lease while awaiting connection.
I guarantee that the pipeline company is getting leaned on to promptly complete the line so that the operator can sell the product instead of hemorrhaging money.
Buddy Cotten
www.cottenoilproperties.com