Shut-In Royalty Payments

Hello, we’ve been receiving shut in royalty payments on a lease we inherited from our Mother when she passed away in 2017. The well name is Leggett Gas Unit #1 (LGU#1) in Shelby County, Texas - API #42-419-31053. We have records that show there were royalty payments paid to her up until 2012 and then, in 3Q12 it was switched to Shut In royalties. It was my understanding that a Shut In well was a temporary situation. We don’t have a good understanding of Shut In status and would appreciate any information. Thank you

Below is what RRC is showing on the status of the Leggett Gas Unit and the contact information for the operator. RRC’s map shows the status of the well as “temporarily abandoned”.

The report says the well has been shut-in since July, 2012. The operator apparently is still in business but so far has managed to put off the cost of plugging the well that is estimated on the report to be $58K. There are lots of Texas wells in that status.

How long they can hold your acreage through shut-in royalty payments depends on the wording in your lease. Newer leases typically include 1-3 year time limits and substantial rental cost but lots of the older ones had no time limits and set the annual delay rental payment at $1/acre.