Richard Hemingway Quoted in Reuters on “Stripper Well” Operators

“U.S. oil ‘strippers’ maneuver to keep pumping amid crude slump”

U.S. “stripper well” operators, the nation’s smallest oil producers seen as most likely to succumb to the crude price slump, are hanging in tough, reducing the chances of near-term production cuts needed to rebalance the domestic oil market.

In the meantime, many stripper operators are maneuvering carefully around clauses in their lease agreements to stay in the business. Most can only turn off their wells for a brief period without losing their rights.

In Texas, for example, the cessation period for which a well can get idled without the operator losing the lease is typically 60 to 90 days, according to Richard Hemingway Jr., head of the oil and gas practice at law firm Thompson & Knight.

“I have clients that are masters at working that,” he said, referring to a technique in the industry known as “stop-cocking,” where producers wait until the very final day of the cessation period before turning back on production.