[uniroyalties]

We signed a mineral lease on 30 acres of our property in 2008 for 5 years, at the time there was not a producing well. They have since drilled a well and it is in production. The well is on the property next to ours, however 15 acres of our property is in the well. When the well started pumping in June of last year, we were left out of the division orders. We notified the well owner and were assured they would get it straight, after trying to tell us we were in the well for 5 acres, we finally got it straight for 15 acres, but our interest for the first 5 months was paid to someone else.(a little over 3,200) All parties agree that we are owed for that oil, but no one is willing to pay it. If we cannot get this resolved when they have to renew the oil and gas lease can we request a larger sum to make up for the amount we did not get paid for. Do you have any suggestions as to how we can get the well owner pay for our back revenue?

[proveick]

Attorney.

[whirnot]

I'm confused, if the well is located on adjacent property, how can your property be "in the well"?

[okielegacy]

Originally Posted by whirnot

I'm confused, if the well is located on adjacent property, how can your property be "in the well"?

Wells are grouped into "spacings" that affect a specified number of acres. So, the wellhead itself might be on somebody's tract that is 10 acres, for example, but might have a spacing of 40 acres, meaning 30 of the acres included in the well are someone else's. This is because oil and gas are drained from underneath the well without regard to property lines.

@uniroyalties If you are in fact in the well and can prove such with the pertinent spacing documents, copies of the leases, etc., you should be able to reclaim your monies. However, you should act sooner rather than later, as statute of limitations can prevent your claiming money later. When it comes time to renew or sign a new lease, you always have room for negotiation.

HOWEVER, you say "when they have to renew the oil and gas lease..."

They likely will not have to do that for a very long time. The 5 years is called the "primary term," and is the amount of time in which they have the right to drill and explore for minerals. Essentially every single lease will have a provision in it that says once a well begins producing, the lease remains in effect for the life of the well. This means that the well they drilled could hold your lease at the specified royalty for as long as it is still producing oil or gas, which can be 20, 30, 50 years or more depending on the economics of the particular well.

In other words, if you sign a 5-year lease, it gives them 5 years to drill a well that includes your acreage and start producing. If after 5 years they still have not drilled a producing well that includes your acreage, they could renew the lease with you after renegotiating, you could lease it to somebody else, or a few other possible scenarios. BUT, if in the 5 years they drilled a well that included your acreage and they began producing, they hold that lease for as many years as there is a producing well that includes your acreage.

If the well only affects some of your leased acreage, whether the remaining acreage is "held by production" depends on whether your lease has a pugh clause in it or not.

So, if you haven't figured things out by now, over the course of a 50 year well lifespan, for example, you could miss out on thousands in royalties, depending on how the well produces.

I would recommend seeing an attorney specializing in oil and gas law, and you can look on the Oklahoma Corporation Commission's Oil and Gas website for records regarding the specific well (applications to drill, spacing orders, etc.); just have the legal description of the lands or the well name to search.

And keep contacting the operator, if you have given up.