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Question
I have minerals in a unitized area in Alfalfa County Ok.  The total area is over 4000 acres, and was formed in 1963 and has been producing since.  I have interest in 4 different sections in this unitized area (700 acres) The area is unitized for production from the Pennsylvania formation only, and specifies Pennsylvania only on the orginal plan of unitization..  My question is , When they drill into Mississipian  and create 640 acre spacing units will a new lease need to be signed?  Will their be a bonus?  Will the royalty interest such as 1/8th, 3/16th be negotiable?

Thanks for any insight.

Ray

Answer
Ray,

I would have to review your original lease and the correspondence between you and the lessee in order to try to address this issue.  

If there is a clause that releases non-producing zones, then it would be clear that a new lease and bonus would be due.

If not, then this is something that often leads to litigation in which the royalty owner claims that the lease should be canceled as to the non-producing zones (which would lead to a situation requiring a new lease and bonus) or, alternatively, that  the lessee should be required to complete to the additional paying zones (no bonus, but probably less resistance from the lessee).

L. Mark Bonner      
Norman & Edem, PLLC
127 N.W. 10th St.
Oklahoma City, OK 73103
405-272-0200
405-272-1055 (fax)

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Mark Bonner

Expertise

Interests include oil and gas leases, mineral deeds, royalty payments, interest on late royalty payments, post-production costs.

Experience

I have been an attorney for over 20 years.

Organizations
Norman & Edem, PLLC 127 N.W. 10th St. Oklahoma City, OK 73103 405-272-0200 (Tel.)

Publications
Oklahoma Bar Journal; Oklahoma Association for Justice Advocate

Education/Credentials
Highest Honors, OU College of Law, 1992 Earl Sneed Award for Oil & Gas

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