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Oil/Gas - expired leases and land man for mineral rights owners
Expert: Alan H. Coogan - 10/25/2009
Question
QUESTION: My family has some mineral rights currently under a lease that is about to expire. 1/4 of the rights in that lease are involved in a producing well unit,1/4 are contained in an existing drilling unit that has not been spudded, and the rest of the rights are with property within very close proximity of the other two quarter interests (all within Mountrail County, ND). I am presuming that the original lease which is set to expire in November will continue in force only on the mineral rights property containing the active well and that the the mineral rights on the properties not involved with the well will expire. Is that true.
Additionally if that is true I was wondering if mineral rights owners have themselves actually hired landmen to negotiate new leases?
ANSWER: Dear Wayne:
Look at the lease terms Unless there is a Pugh clause or other partial termination clause,
your presumptions may not be correct.
AHC
---------- FOLLOW-UP ----------
QUESTION: So saying there is no Pugh clause, a given lease could remain in effect for all mineral acres in the original lease for as long as there is production on any acreage from the original lease. Is that a correct interpretation?
Could you explain a Pugh clause?
Answer
Dear Wayne, yes and usually does.
That is the lease (original) covered certain land.
It ended if no well was drilled in say 5 years, but if a well were drilled, the well "held by production" the lease "so long as producing in paying quantities"
That is the typical lease.
I do not know what your lease says.
You need to get a copy and interpret it.
Good luck
AHC
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