0 – 15 Minutes
Doug discusses termination provisions and shut-in provisions in oil and gas leases. Doug explains Held by Production and how companies can manipulate the term length of oil and gas leases by spreading production over many decades.
15 – 30 Minutes
Doug discusses gas lease shut-in royalty provisions and gas companies implied duty or covenant to market or produce gas. Doug explains shut-in provisions and limitations that landowners can negotiate in oil and gas leases and how shut-in limitations can benefit property owners. Doug discusses possible future litigation by landowners against oil and gas companies for violating implied duties or covenants to market or produce gas under the landowner’s leases. Segment breaks down shut-in provisions and impacts of shut-in royalty payments on Pennsylvania landowners.
30 – 45 Minutes
Doug explains “Held By Production” and how leases may continue beyond the five year primary term. Held By Production can be misleading as leases are very often extended or held without any production or royalties coming to the landowner. Merely drilling a vertical or conventional gas well can hold most leases, even if gas is not produced in paying quantities. However, there are many ways for gas companies to extend oil and gas leases beyond the primary term and into the secondary term that do not result in landowner royalties.
45 – 60 Minutes
Doug concludes explanation of primary term, gas company operations necessary to extend leases to secondary term. Including, but not limited to applying to DEP for Well Drilling Permits, obtaining drilling permits, staking wells, surveying well sites, construction or clearing of sites, and other broad-based definitions of operations. Landowners must try to negotiate and limit broad definitions of operations and seek to require drilling or commencement of a well in order to extend the gas lease to the secondary term.
