Continental is drilling in Roosevelt County Montana. After offering to lease our interests in Section 26, they have reneged.
They have found a 1974 lease signed by my parents for Sections 26 and 35. In 2013, a horizontal well was drilled on neighboring land in Section 36, and as it was a horizontal well it included my parents’ section 35 land in the spacing unit.
The horizontal well, including my parents’ minerals in Section 35, continues to operate.
In 2014, Continental leased Section 26 from us for three years but never drilled.
BUT NOW Continental says they don’t have to lease from us at all; the 2014 lease was an error, as my parents’ original 1974 lease holds section 26 by production! So the question is: Can ALL of a lease be held by production, even the areas of a lease that are not in an operating well’s spacing unit?
Except where the lease says otherwise or Oklahoma under the statutory Pugh clause, production on any part of the leased tract or unit in which the leased tract is located, extends all of the leased land.
Release of leased acreage will depend on the lease terms. So you need to read the 1974 lease to see whether undrilled or nonproducing acreage drops out after primary term or whether all acreage is held by a single well anywhere on the two sections. As this is an old lease, was there continuous production from 1970’s to date on one or both sections? Have your parents been in pay for all these years? If not, then the lease would have terminated in its entirety. Roosevelt County MT may have more than one Section 35 or 26, so post the Twn and Rge for someone to help you find the production history. You may want a MT oil and gas attorney to look at the lease regarding the release of acreage.