SWD Jasper Cty $700 / month?

Oil and Gas Leasing Help
1

My grandfather set up a SWD lease 15 years ago and signed a perpetual lease. The land has been passed on to my parents. I have a few questions for anyone willing to listen.

1. Is a flat rate of $700 good? I have my doubts.

2. How can I find out how many barrels the lessee is putting into the SWD?

3. How can we get out of this perpetual lease?

4. Is there anyway to look up other SWD owners in the area to find out what the market rate is?

5. What questions should I be asking and to whom?

6. Is there a life to SWD's? ie do they fill up? If so how do you know 'how full' they are?

Thanks in advance,

Matt

2

Great info Cliff, thank you. I didn't think of calling the other operators in the area. From what I've seen the other wells are operated by the producers. I have not seen the lease agreement yet, but I will soon. Thanks again.

3

Dear Mr. Monroe,

It may be much about nothing, if the rights were granted years ago in a perpetual disposal agreement. If the rights were granted in a perpetual agreement, then it is very likely that the SWD is a commercial SWD well and injects waste water from a number of wells.

The other type of SWD well is on a lease basis only. The permitting requirements are much less, the surface owner has almost no negotiating power on the more typical lease forms.

Are you looking to break the agreement that your grandfather entered into many years ago?

As to whether the rate is right is entirely dependent on how many bbl of salt water are being disposed.

In Jasper County (Texas), typical commercial wells pay to the landowner about $.50 per bbl in today's market.

4

I got the lease. It is a commercial salt water disposal well. It also specifically says "This agreement shall extend for a primary term of six months and for so long as the company pays the lease. It shall be binding upon the present land owners, their heirs, and successors."

Seems a bit crazy that something such as a perpetual lease can exist. It basically is a purchase of the property without the transfer of title. I know they are not legal in some states.

I'm going to schedule some time w/ a lawyer to see what they say, but I do not expect that anything can come of it. I do not know how many bbls are being deposited or taken out. I will try to get that info soon.

Thanks for all the help.

Matt