QUESTION: We own a family farm of 160 yrs or more.we get free gas from a shallow well that is now located on adjacent property. Use to be part of our farm from what i gather. we just recently started recieving yrly royalty check from Zama Gas and Oil. The royalty was filed and given to us by my grandmother her attorney sent us the paper work to sign etc. I was told by the now retired gasman who tended the well that there was a lifetime lease on the well, what is life time and what happens if Zama sells the well and its capped. I know I will lose my gas at that point but what about the lifetime lease and the mineral rights at that point, Do we just lose the free gas and mineral rights to the new buyer not sure what to do we just installed new gas furnace and dont want a phone call saying our gas is going to be shut off without any type of warning or something. My grandmother who is 105 yrs young cant really tell me much about the lease or royalties and Im not sure what to do at this time I ve been to the court house to try and decifer who owns what and just seem to get frustated. We have been approached by three diffferent companies wanting to lease our property and have not signed with anyone one outfit says we own all rights one says only 15 of the acres are ours and one says none of the land is ours. ANY AND ALL HELP WILL BE GREATFUL THANKS
ANSWER: A lease (all leases) are for a specific amount of time (10 years down to 6 months, etc) and can continue for an indefinite period if oil or gas production begins and the royalty owners are paid a royalty. The "lifetime" in this sense is the life of the well and not a person's life.
You are correct that if Zama "plugs and abandons" (P & A) the well then your gas for the house will be shut off. But, if they P & A the well they will usually have a short amount of time (6 months) to re-work the well or drill a new well to establish production or the lease will expire. If the lease said that you get to free gas from the well you will very likely be able to obtain gas from the new or re-worked well. (You will be responsible for connecting to the new well.)
If you own the minerals you will own the minerals until you sell them or you sell the property with them. The lease does not effect your ownership. Ask each of the landmen to back up their claim or lack of your claim to the minerals.
If they are asking you for a lease that does mean that they believe that you own at least a portion of the mineral estate. You may be very well served to seek the advice of an attorney that really does know oil and gas. If you can't find one locally then call the State Bar Association in your state and ask them for a referral. It may cost you $200 but he will very likely make that back for you in the new lease by obtaining better terms for you than you would have originally received.
Ask any follow-up question that you would like and I'll be back to answer you today...sorry for the delay over the weekend.
---------- FOLLOW-UP ----------
QUESTION: What happens if the well is sold and plugged. I hear that Zama has been approached to sell to consol. where do we stand at that point.
If someone buys the well from Zama they will either have to continue producing the well, and you get to keep getting free gas or they will have to re-drill a new well and you may have the opportunity to continue to get gas from the new well at your own connection expense.