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Most mineral lease are exactly that, you get upfront cash and a percentage of the production value. If the company doesn't drill in a period of time, or if the
by johnrgrace 14y ago
Most mineral lease are exactly that, you get upfront cash and a percentage of the production value. If the company doesn't drill in a period of time, or if there is a nearby well the option becomes worthless. A big problem for companies right now is that they have a lot of drill it or lose it lease which has them pumping up production in a period of very low prices.
- ssharp 14y agoThis is correct. I believe the standard contracts around here are a 10 year option to drill. If a well is built within 10 years, the option is automatically extended to some longer period of time. Also, I'm not entirely sure exactly how the fracking laws work in regards to mineral rights, but just because your property doesn't have a well doesn't mean you're not involved in production. The horizontal fracturing generally extends well beyond property lines and the oil companies are putting multiple lots into drilling lines. So if my neighbor physically has a well on his property and is producing, I'm probably getting paid a share of that for the acreage I leased next to him. I'd guess this is designed specifically for the "I DRINK YOUR MILKSHAKE!" thing in There Will Be Blood.