Do you have minerals under a well or wells that are producing little to no value? If so, you may find the following information helpful about oil and gas lease cancellation.
Chances are, you already know how valuable your minerals are. You may own minerals that have been passed down for generations in your family, from your parents or grandparents. Or you may have recently purchased your minerals after carefully selecting an addition to your mineral portfolio. Either way, you anticipate that your minerals will provide value. However, nothing can steal value from your minerals quite like being held by an old, noncommercial well.
Lease cancellation is the process of identifying old, non-producing wells and cancelling the leases under those wells so that the mineral owners can obtain new leases.
The purpose of the oil and gas lease is to derive value from your mineral interests by extracting minerals out of the ground and selling them. As a mineral owner, you receive value through lease bonuses and royalty payments. When your minerals are held by an old well that is no longer producing sufficient revenue, you’re not getting any value. When this happens, the operator of the well should plug the well so that your minerals are free to be leased again. Unfortunately, this does not always happen.
Lease cancellation is a race against time. If you don’t act quickly to release your minerals from the old well, the company holding your lease can sell the lease interest to another company (known as a “farm-out”) and they will get the bonus that could have gone to you.
At Graft & Walraven, our Oil and Gas law and Litigation Team work quickly and efficiently to prevent farm-outs from noncommercial wells, release your minerals from the old leases, and then obtain new leases and bonus payments for you. In the last two years alone, Graft & Walraven has successfully released over 2000 mineral acres from non-productive wells, obtaining over $5,150,000.00 for Oklahoma mineral owners.
If you have minerals earning only nominal income, contact us to determine if a lease cancellation case could earn you a new oil and gas lease bonus.