It is understood that an operator must produce a well at commercial paying quantities. However, is that amount defined. Our property is covered by a lease signed close to 10 years ago. The operator has never done anything with it. The average monthly mcf produced over the past year is around 60. There have been months within the year that were 0, just not consecutively.

Is this amount of mcf considered paying quantities?

thanks in advance for any replies.

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Posted by blueridgeTiger

Granbury, TX

Member since Jun 2004

22098 posts

Posted on 8/13/08 at 8:15 am to rubeedoo

There's been alot of litigation over paying quantities in Louisiana and other oil and gas producing states. Usually, as long as the operator is producing enough to cover his variable costs, the courts have held it to be paying quantities. Sometimes these variable costs are so slight that almost any production will be sufficient - cases have gone both ways.

I recommend you get all your documents together (lease, royalty check stubs, etc) and consult a good local attorney.

This post was edited on 8/13/08 at 8:31 am

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Posted by TigerStuckinOkieland

Oklahoma City, OK

Member since Feb 2007

1330 posts

Posted on 8/13/08 at 11:50 am to blueridgeTiger

I think that some mineral owners are not considering the fact that their share of production (checks being small)only represent their prorata share of total $$ paid...... I agree that it's disheartening to get a monthly check for $50+/- in the midst of the bonus dollars being thrown out nowadays in the HS play, but if the mineral owner's royalty is 1/8th, and is only a small portion of a 640-acre unit, then it's only a small portion of a larger amount. In most cases, an operator only needs $500 or even less to produce a profit, especially if his pumper/switcher in the field has multiple wells to oversee...spreads out their overhead/operations cost over a # of wells.

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