I have an Oil, Gas and Mineral Lease in Karnes County, TX which was executed on June 11, 2009 for three years with an option for an additional three years. I have 100% of the minerals. There has been no drilling on the property, in fact, there has been no communications with the Leasee since the signing of the lease and the bonus payment. My questions are: (1) if the Lessee does not provide me notice of his intentions, either verbal or written, to exercise his three year option on or before June 11, 2012, is the lease considered expired or is there a grace period? (2) if the Lessee intends to exercise, when am I to receive payment?
25 acres
Bryson Wallace said:
They have until the date to either pool you in a unit or pay you for the additional 3 years. How many acres do you have?
Bryson:
Thank you for information. The property is 1 mile south of the Wilson County/Karnes County line on Hwy 123. Pretty much all of the land owners here in the M.I. Leal Survey signed leases within weeks of each other on the same terms. Assuming the Lessee has not pooled my land into a unit or contacted me on the third anniversary of the lease (6/11/12), would the lease then be considered expired or is there a grace period?
Thanks.
Bryson:
Thanks for the vote of confidence. I'll take a look a my lease. Thanks, again and have a good day.
Bryson Wallace said:
It all depends on the language used in the original lease. Sometime there is a grace period and sometimes there is not. I was able to locate your land and there is no way they will not extend your lease. It sits in a prime area. Your payday will come.
Mark A. Baird said:Bryson:
Thank you for information. The property is 1 mile south of the Wilson County/Karnes County line on Hwy 123. Pretty much all of the land owners here in the M.I. Leal Survey signed leases within weeks of each other on the same terms. Assuming the Lessee has not pooled my land into a unit or contacted me on the third anniversary of the lease (6/11/12), would the lease then be considered expired or is there a grace period?
Thanks.
Mark:
If you don't completely understand the lease wording, I would consult a professional for an interpretation. Sometimes the wording in leases can be confusing, especially if your background isn't in this business. I have several active leases and sometimes trying to decifer the wording is difficult. Good luck.
Mark A. Baird said:
Bryson:
Thanks for the vote of confidence. I'll take a look a my lease. Thanks, again and have a good day.
Bryson Wallace said:It all depends on the language used in the original lease. Sometime there is a grace period and sometimes there is not. I was able to locate your land and there is no way they will not extend your lease. It sits in a prime area. Your payday will come.
Mark A. Baird said:Bryson:
Thank you for information. The property is 1 mile south of the Wilson County/Karnes County line on Hwy 123. Pretty much all of the land owners here in the M.I. Leal Survey signed leases within weeks of each other on the same terms. Assuming the Lessee has not pooled my land into a unit or contacted me on the third anniversary of the lease (6/11/12), would the lease then be considered expired or is there a grace period?
Thanks.
Mr. Williams:
Very, very interesting. Thank you for the information.
Mark
Cliff Williams said:
I agree with the info given before me and would like to add one thing. Legally speaking - the default rule is that there is no grace period. The courts have strictly construed the termination dates of leases, shut-in payments and delay rental payments. If they aren't there prior to expiration the lease expires.
Now, most leases no longer have delay rentals but there was a company man that was driving a delay rental check out to a mineral owner and the company man had a wreck and was out for some time recovering. The company really wanted the lease but they did not get the delay rental there until after the expiration date. The courts said that they should have left earlier and that even though there were extenuating circumstances with the wreck the company had no excuse for being late and the court decreed the lease expired.
If you have some special language the default can be circumvented and the company could have some "grace period" but that is highly unlikely.
Cliff Williams
Same situation in LaSalle County except well is drilled but no frac yet/3 yr lease will expire in Dec 2012. Do they have to complete well before end of lease
Linda:
I believe the wording in the original lease needs to be reviewed but most likely the operator has the neccessary action to hold the lease if all has been completed except the fracking of the well.
Linda K Henderson said:
Same situation in LaSalle County except well is drilled but no frac yet/3 yr lease will expire in Dec 2012. Do they have to complete well before end of lease
Bryson, Charles, Cliff and Linda:
Very good discussion. Since the beginning of this discussion, I have learned that EOG, the Lessee, had received a horizontal well drilling permit from the TRC on 12/10/11 on an indicidual's land in my Survey, M. I. Leal. The drill site is about 2 miles from my property. According to a neighbor, a rig has been on that site and is ,reportedly, in the process of being moved out. It appears that there have been quite amunber of drilling permits granted during December in the area and several are within 2 miles of my land. My question is: if my land is part of the pooling of land affected by drilling am I to receive some kind of notice either in advance or after the fact? There are some repairs I would like to make on my land such as a new fence and now I not so certain if those funds will be coming from the next 3 years lease renewal or out of my own pocket if drilling begins prior to 6/11/12.
I will probably never lease again, but if I did I would want a clause that nothing less than production would save my lease for the operator, after all they had years to drill and complete a well. If the operator thinks they need more time they should have tried a longer lease. The lease bonus on a paid up lease is delay paments paid in advance. In my opinion, no production, no payments, should = no lease. I think it would be a perversion of the shut in clause to apply it to a well that was never completed and produced. The only reason I would lease is to actually produce my minerals. It would never be my intent to lease so the operator could drill a well and lock in a low price holding my mineral acres stockpiled with a non-producing well. I would recommend that you bargain to get more out of shut in payments, such as they be quarterly and $50 per acre rather than the usual $1 per net acre per year. Don't allow the operator to stockpile your acres for virtually nothing.