Continuous Development. (a) If, at the expiration of the Primary Term, oil or gas is not being produced from the Land or on acreage pooled therewith, but Lessee has commenced the drilling of a well in a unit including the Land, the Lease will not terminate but will remain in effect for so long thereafter as operations are carried out with due diligence with no cessation of more than 60 days, and if the operations result in the production of oil or gas, the Lease shall remain in force as otherwise provided herein. For the purposes of this Lease, the term “operations” means operations for any of the following: drilling, testing, completing, reworking, recompleting, deepening, plugging back, or repairing of a well in search for or in the endeavor to obtain production of oil or gas. (b) After the Primary Term, if this Lease is maintained by production or otherwise, it will remain in force as to all acreage and depths as long as there is no lapse of more than 180 days between the completion of one well and the commencement of the actual drilling of another well. If a well has been completed during the Primary Term, the 180 day period for commencing the next well will start at the end of the Primary Term. The commencement of actual drilling means the penetration of the surface with a drilling rig capable of drilling to the anticipated total depth of the well. After a well is commenced, drilling operations must continue with diligence and in a good and workmanlike manner in a good faith effort to reach the anticipated total depth with no cessation of more than 60 consecutive days. A well will be deemed to have been completed on the date of the release of the drilling rig from the drillsite. The permitted time between ▇▇▇▇▇ shall be cumulative so that if a well is commenced after the end of the Primary Term but prior to the date it is required to be commenced; the number of days prior to the date on which the well should have been commenced shall be added to the time permitted for the next well. (c) If at any time the maximum time for the commencement of the actual drilling of a well expires without the commencement of the well, or upon the expiration of the Primary Term if the Lease is not maintained by continuous drilling, this Lease will terminate except as to the Retained Tract (defined below) surrounding any well that is then producing in paying quantities or deemed to be producing in paying quantities by virtue of payment of shut-in royalties, and as to each Retained Tract, the Lease will then terminate as to all depths below the stratigraphic equivalent of the base of the deepest producing formation on the Retained Tract and above the top of the stratigraphic equivalent of the shallowest producing formation on the Retained Tract. The Lease will be treated as a separate lease with respect to each Retained Tract and will continue so long as production in paying quantities continues from the tract. If production from a Retained Tract ceases from any cause, this Lease will terminate as to that tract unless Lessee commences operations for drilling or reworking on the tract within 60 days after the cessation of production, in which case the Lease as to that tract will continue in force as long as the operations are prosecuted with no cessation of more than 60 consecutive days, and if they result in production, so long thereafter as there is production from the tract. (d) As used in this Lease, the term “horizontal well” means a well that meets the definition of a “horizontal drainhole well” under Statewide Rule 86 of the Railroad Commission of Texas, and a “vertical well” is a well that is not a horizontal well. The land assigned to a well for the purposes of this paragraph is referred to as a “Retained Tract.” A Retained Tract for a well may not exceed the minimum size required to obtain a drilling permit under the well density rules adopted by the Railroad Commission of Texas for the field, or if there are no field rules that apply, the Retained Tract shall be limited to the smallest size required to obtain a drilling permit under the statewide well density rules of the Railroad Commission of Texas. A Retained Tract for a vertical well producing from the ▇▇▇▇▇▇▇ Shale formation may not exceed 40 acres. If field rules are established later that permit obtaining a drilling permit with less acreage, a Retained Tract for a vertical well may not exceed the minimum size permitted. A Retained Tract for a horizontal well may include the minimum acreage specified above for a vertical well plus the additional acreage listed in the tables in Rule 86 (For Fields with a Density Rule of 40 Acres or Less) and must comply with the requirements of Rule 86 for minimum permitted well density, and if the well is producing from the ▇▇▇▇▇▇▇ Shale formation, the acreage of the Retained Tract shall be assigned as if well density for vertical ▇▇▇▇▇ is 40 acres or less. Each Retained Tract for a vertical well must be as nearly in the form of a square as is practical with the well in the center of the square and with the sides of each square running in the cardinal directions. Each Retained Tract for a horizontal well must be in the form of a rectangle with the horizontal drainhole being as nearly as practical along the center line of the long dimension of the rectangle.
Appears in 1 contract
Sources: Oil and Gas Lease
Continuous Development. (a) If, at the expiration of the Primary Term, oil or gas is not being produced from the Land or on acreage pooled therewith, but Lessee has commenced the drilling of a well in a unit including the Land, the Lease will not terminate but will remain in effect for so long thereafter as operations are carried out with due diligence with no cessation of more than 60 days, and if the operations result in the production of oil or gas, the Lease shall remain in force as otherwise provided herein. For the purposes of this Lease, the term “operations” means operations for any of the following: drilling, testing, completing, reworking, recompleting, deepening, plugging back, or repairing of a well in search for or in the endeavor to obtain production of oil or gas.
(b) After the Primary Term, if this Lease is maintained by production or otherwise, it will remain in force as to all acreage and depths as long as there is no lapse of more than 180 days between the completion of one well and the commencement of the actual drilling of another well. If a well has been completed during the Primary Term, the 180 day period for commencing the next well will start at the end of the Primary Term. The commencement of actual drilling means the penetration of the surface with a drilling rig capable of drilling to the anticipated total depth of the well. After a well is commenced, drilling operations must continue with diligence and in a good and workmanlike manner in a good faith effort to reach the anticipated total depth with no cessation of more than 60 consecutive days. A well will be deemed to have been completed on the date of the release of the drilling rig from the drillsitedrill site. The permitted time between ▇▇▇▇▇ shall be cumulative so that if a well is commenced after the end of the Primary Term but prior to the date it is required to be commenced; the number of days prior to the date on which the well should have been commenced shall be added to the time permitted for the next well.
(c) If at any time the maximum time for the commencement of the actual drilling of a well expires without the commencement of the well, or upon the expiration of the Primary Term if the Lease is not maintained by continuous drilling, this Lease will terminate except as to the Retained Tract (defined below) surrounding any well that is then producing in paying quantities or deemed to be producing in paying quantities by virtue of payment of shut-in royalties, and as to each Retained Tract, the Lease will then terminate as to all depths below the stratigraphic equivalent of the base of the deepest producing formation on the Retained Tract and above the top of the stratigraphic equivalent of the shallowest producing formation on the Retained Tract. The Lease will be treated as a separate lease with respect to each Retained Tract and will continue so long as production in paying quantities continues from the tract. If production from a Retained Tract ceases from any cause, this Lease will terminate as to that tract unless Lessee commences operations for drilling or reworking on the tract within 60 days after the cessation of production, in which case the Lease as to that tract will continue in force as long as the operations are prosecuted with no cessation of more than 60 consecutive days, and if they result in production, so long thereafter as there is production from the tract.
(d) As used in this Lease, the term “horizontal well” means a well that meets the definition of a “horizontal drainhole well” under Statewide Rule 86 of the Railroad Commission of Texas, and a “vertical well” is a well that is not a horizontal well. The land assigned to a well for the purposes of this paragraph is referred to as a “Retained Tract.” A Retained Tract for a well may not exceed the minimum size required to obtain a drilling permit under the well density rules adopted by the Railroad Commission of Texas for the field, or if there are no field rules that apply, the Retained Tract shall be limited to the smallest size required to obtain a drilling permit under the statewide well density rules of the Railroad Commission of Texas. A Retained Tract for a vertical well producing from the ▇▇▇▇▇▇▇ Shale formation may not exceed 40 acres. If field rules are established later that permit obtaining a drilling permit with less acreage, a Retained Tract for a vertical well may not exceed the minimum size permitted. A Retained Tract for a horizontal well may include the minimum acreage specified above for a vertical well plus the additional acreage listed in the tables in Rule 86 (For Fields with a Density Rule of 40 Acres or Less) and must comply with the requirements of Rule 86 for minimum permitted well density, and if the well is producing from the ▇▇▇▇▇▇▇ Shale formation, the acreage of the Retained Tract shall be assigned as if well density for vertical ▇▇▇▇▇ is 40 acres or less. Each Retained Tract for a vertical well must be as nearly in the form of a square as is practical with the well in the center of the square and with the sides of each square running in the cardinal directions. Each Retained Tract for a horizontal well must be in the form of a rectangle with the horizontal drainhole being as nearly as practical along the center line of the long dimension of the rectangle.
Appears in 1 contract
Sources: Oil and Gas Lease