What it means when your well stops producing and your options as a mineral owner.
Get Your Free Mineral ValuationIf you've noticed your royalty checks have stopped or received notice that your well has been "shut in," you may be wondering what this means for your mineral rights. A shut-in well is a common occurrence in the oil and gas industry, and understanding it can help you make informed decisions about your minerals.
Shut-In Well Definition: A well that has been temporarily taken offline and is not currently producing oil or gas. The well is still capable of production and has not been plugged or abandoned.
Unlike an abandoned well (which has been permanently plugged), a shut-in well can be reactivated when conditions improve. The well equipment remains in place, and the operator maintains the option to resume production in the future.
Wells are shut in for various reasons, most of which are normal business decisions rather than permanent problems:
When oil or gas prices drop below a certain threshold, it may cost more to operate the well than the production is worth. Operators shut in marginal wells until prices recover to economically viable levels.
If the pipeline taking production to market has capacity constraints, is under maintenance, or becomes unavailable, wells may be shut in until transportation is restored.
Equipment failures, downhole issues, or surface facility problems may require shutting in a well while repairs are made or equipment is replaced.
Wells may be shut in while waiting for permits, during regulatory reviews, or to comply with state conservation orders.
Beyond price, factors like lack of available processing capacity, storage limitations, or contractual obligations may lead to temporary shut-ins.
Since royalties are a percentage of production revenue, you won't receive royalty payments while a well is shut in. This is the most immediate impact mineral owners notice.
Many leases include a "shut-in royalty" clause requiring the operator to make periodic payments (often equivalent to delay rentals) to keep the lease in effect during extended shut-in periods. These payments are typically much smaller than production royalties.
Once production resumes, your regular royalty payments will begin again. There may be a delay of 30-90 days between production restart and receiving your first check due to standard processing times.
Whether a shut-in well keeps your lease in effect depends on your specific lease terms:
Most modern leases include a shut-in clause that allows the operator to maintain the lease during periods when a well capable of production is shut in. Without this clause, cessation of production could terminate the lease.
Many shut-in clauses require the operator to make shut-in royalty payments to preserve the lease. If these payments aren't made as required, the lease may expire.
Some leases limit how long a well can remain shut in (e.g., 90 days, 6 months, or 1 year) before the lease terminates or additional conditions apply.
Important: Every lease is different. Review your specific lease language or consult with an attorney to understand how shut-in provisions affect your minerals.
The majority of shut-in wells eventually return to production when:
Prices improve
Repairs are completed
Infrastructure is restored
Market conditions change
A well may be permanently plugged and abandoned if:
Remaining reserves are too small
Repair costs exceed value
Extended low prices persist
Operator exits the area
The operator's decision depends on economics: if the expected future revenue exceeds the cost to restart and operate the well, it will likely be brought back online.
If you have a shut-in well on your minerals, here are steps you can take:
Monitor state records: Most states maintain online databases where you can check well status, production history, and operator filings.
Contact the operator: Reach out to the operator's landowner relations department for information about the shut-in reason and expected timeline.
Review your lease: Understand your lease's shut-in provisions, payment requirements, and time limits.
Check for shut-in payments: If your lease requires shut-in royalty payments, verify you're receiving them.
Consider your options: If you're frustrated with a prolonged shut-in, selling your minerals is one way to get value today rather than waiting.
Yes, you can sell mineral rights even when wells are shut in. Here's what buyers consider:
Buyers evaluate whether the well is likely to return to production. Recent shut-ins due to temporary market conditions are viewed more favorably than long-term mechanical issues.
Wells in prolific basins with proven reserves command more interest. The underlying geology matters more than current production status.
Buyers price minerals based on realistic future expectations. A shut-in well is valued on its restart potential, not its historical peak production.
Some mineral owners choose to sell when wells are shut in because:
They want certainty rather than waiting for uncertain restart
Immediate cash is more valuable than future royalties
Life circumstances require liquidity now
They want to simplify their estate or finances
Get a free valuation to understand what your minerals are worth, even with shut-in production.
Request Your Free ValuationA shut-in well is a well that has been temporarily taken offline and is not currently producing oil or gas. Unlike an abandoned well, a shut-in well is still capable of production and may be reactivated when conditions improve. The well equipment remains in place and the well has not been plugged.
Generally, no royalties are paid during a shut-in period because there is no production. However, many oil and gas leases include a shut-in royalty clause that requires the operator to make periodic payments to keep the lease in effect during extended shut-in periods. Check your specific lease terms.
The duration depends on your lease terms and state regulations. Some leases allow shut-in periods of 90 days to one year or more, often with required shut-in royalty payments. If a well remains shut in beyond the permitted period without proper payments, the lease may expire.
Many shut-in wells do return to production when market conditions improve, infrastructure issues are resolved, or repairs are completed. However, some wells may be permanently plugged and abandoned if the operator determines they are no longer economically viable. The decision depends on oil and gas prices, remaining reserves, and repair costs.
Yes, you can sell mineral rights with shut-in wells. Buyers evaluate the restart potential based on location, reservoir quality, commodity prices, and the reason for shut-in. While shut-in wells may be valued less than actively producing wells, they still have value based on future production potential.
Disclaimer: This information is for educational purposes only and should not be considered legal or financial advice. Lease terms and regulations vary. Consult with qualified professionals for specific questions about your shut-in wells and lease provisions.