Can you hold a lease if the well has been converted into a SWD well? I am updating the data and I’m not sure if I leave it active or expire the lease.

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Asked on June 14, 2016 4:24 PM
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It would obviously depend on the lease language, but without seeing it, the lease in question most likely would have expired unless it is being held by another producing well on the lease, that lease is part of an active/producing unit, or it is still in it’s primary/secondary term.

With that said, do you have a disposal agreement or any other agreement in place with the surface owner to cover the SWD Conversion? Generally the only viable reason to convert a producing well to an SWD under the terms of an existing oil and gas lease would be to aid in the further development of that lease or the unit holding it. If the well was converted for the purpose of disposing off lease or off unit water, there would need to be a disposal agreement in place with the surface owner. If there is no disposal agreement in place, it would seem likely that all or part of the lease is HBP in a unit or by another producing well.

Again, without seeing the lease or any other background information, it’s hard to definitively answer your question, but hopefully this helps in your research.

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Posted by Hank Latimer, RPL
Answered on July 1, 2016 12:08 AM
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