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Oil/Gas/Mineral rights lease

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QUESTION: My family has several thousand acres in SW Kansas leased to one of the major oil companies. Our 3+3 year lease expires in May 2015. Question is if they choose to renew and submit a new offer how much lead time do they typically give themselves? 3-6 months? Thanks in advance, hopefully this question is not to general.

ANSWER: Hello Keith,
Your question is difficult to answer because many times when an Operator has intention to drill a well they have plenty of lead time, and other times an unexpected issue delays that date further down the road to closer to when leases are going to expire.

However, most oil and gas leases need to be read very carefully because the language provides that an Operator only has to 'commence operations to begin drilling a well', and the well does not have to be 'spud', i.e., a drillbit penetrating the ground, to maintain the oil and gas leases beyond the primary term [or that term extended to beyond the primary term.

Answering your question with more of a direct response however, I would say an Operator would approach you 90 days prior to the expiration of the primary term to begin negotiations to renew your lease.

I hope my answer provides you with information that is helpful.

Thank you for asking me.



---------- FOLLOW-UP ----------

QUESTION: Thanks for your excellent answer.

One more curious question... Suppose you have two separate mineral rights owners with adjacent properties. Can a horizontal well be drilled on the neighboring property into your land? Is that something that is monitored to prevent it from happening? One would assume there would be some type of violation if it occurred. Not something that has happened but a curious thought with the advent of horizontal drilling.

Answer
Keith,
This is a great question.

In the recent years, many Operators have revised their standard oil, gas and mineral leases to include language that allows the Operator to use the surface of a property to drill down vertically, and then turn and drill horizontally which allows the bottom hole to end up under another property owner's lands.  

This is referred to as subsurface wellbore rights.  

Unfortunately, only the property owner where the bottom hole location is, is credited with the production from the well, even though, another property owner's surface was used to drill down vertically initially.

It is my understanding, the only way a subsurface wellbore can be allowed by the landowner whose property is where the drillbit penetrates the surface, is by the inclusion of this additional subsurface wellbore language in the lease.  An oil, gas and mineral lease that does not include a subsurface wellbore provision would not allow this.

Thank you for allowing me to assist you and others.  

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Laura M. FitzGerald, CPL

Expertise

PLEASE READ CAREFULLY BEFORE SUBMITTING A QUESTION. I can answer all questions related to oil and gas ownership, mineral interests and working interests concerning the leasing and selling of your minerals, any questions concerning pipeline ROW's, units with the Louisiana Department of Conservation; pooling provisions, depth limitations, vertical or horizontal pugh clauses; and oil and gas terminology. I can offer assistance in negotiating for leasing your property, assisting in locating owners of suspended funds or to receive the best offer for your oil and gas interests, should you desire to sell. I am only able to answer questions regarding oil and gas leases, minerals, royalties, or offers to purchase mineral/royalty interests if I have complete information. Please provide a full legal description for your interest(s). If the question pertains to a lease, please include all terms of any current (or desired) lease offers, including lease bonus amount, royalty and lease term. If the question is regarding a mineral or royalty interest offer to purchase, please provide the offer amount, date of offer, other offer terms, and further details on the mineral/royalty interest, such as lease terms, and if producing, the average monthly income. Since I receive numerous inquiries daily, I am only able to answer your questions efficiently and effectively if I have complete information. I must decline any questions submitted with incomplete information. If your question is non-technical in nature and you simply need assistance understanding an oil and gas matter, please submit your question with as much information and detail as possible. Any background information that has led to your question is also very helpful.

Experience

I have over 34 years experience as an Independent Petroleum Landman. I became a Landman after working as a paralegal for Oil & Gas Attorneys for 8 years. My first 2 years were spent specializing in Well History and Research with the Louisiana Department of Conservation, then moving into clearing title defects and handling title curative for oil and gas properties for the next 6 years. Subsequent thereto, I handled title issues, buying oil and gas leases and settling surface damages. I also acquired acreage for drilling prospects in excess of 10,000 acres. I also became a mineral/royalty owner commencing in 2004 and have found that I can help many people when they have reached the point in their lives they feel converting their minerals or royalties into a cash asset benefits them.

Organizations
American Association for Professional Landmen, ArkLaTex Assoc. of Professional Landmen, and Dallas Association of Professional Landmen (DAPL), Certified by the Women's Business Enterprise National Council (WBENC)- South. This certification is one of the most widely recognized and respected certifications in the nation. This designation is reserved for only those women-led businesses that exemplify the characteristics of integrity and professionalism to which the WBENC adheres to so strictly.

Education/Credentials
Attended LSU, became a Certified Professional Landman in 1994; Notary Public with dual authority in multiple parishes in North Louisiana; Bilingual in English and Greek

Awards and Honors
Expert Oil & Gas Professional assisting attorneys representing landowners. Involved in 2 lawsuits and both suits were awarded to the landowner. Ilios Resources, Inc. has been awarded the Best of Shreveport Oil and Gas Mineral Buyer Award for 2016, 2015, 2014, 2013 and 2012.

Past/Present Clients
Consultant Landman for Texas Oil & Gas (TXO Production Corp.), Anadarko Petroleum, Comstock Resources,Independent Geologists, Pipeline ROW Clients, and Oil & Gas Attorneys. For the past 5 years my practice is primarily an advocacy for the landowner. I also assist royalty owners recover suspended payments or incorrect royalty payments, or sell their mineral or royalty interest.

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