Our oil and gas lease in Weld County, and its extension, expire in May. 7N 50W. With oil and gas so low, I am assuming we should just sit tight. There is a permit on one of the parcels, but no drilling started, so I assume the lease expires. Can anyone please give us some advise? What are new leases going for? Thank you!
SUSIE,
The legal language of the lease in total and the lessee's interpretation of it may contain an argument that the lease can not expire on the simplified lease date. Carefully read the portion that allows an automatic extension of the lease. Four months is a long time in the mobil oil business. My advise is to wait until the expiration date then send a demand letter to the operator/lessee that renders the lease expired in recordable form. In the meantime, don't negotiate a lease with a third party without until you understand the lessee's rights to extend the lease for your having made a new deal. That could really hurt you and help the lessee.
From a practical standpoint, if you are leased to one of the prominent operators and your acreage is large, the operator may ask for an extension before exploration.
Gary: Thank you so much for your response! The lease already has had one automatic extension, so it is done. I got a call from a landman from Caerus Oil and Gas that bought out Prima's interest in our lease. This company wants to resign us, so I assume they also see the lease as expiring. No, not prominent companies. I appreciate any and all advise! My family has rights on only 3/4 of a section (in 2 non-contiguous parcels, though adjoining sections) and we go from having a 1/3 share to 1/12 (me). A few family members have extremely small incomes, so any way we can bump up return is important. They are not selling, however. Thank you.