If a lease will expire, by its own terms, and the lessee desires to maintain the lease in effect by the payment of bonus, rather than commencing operations, and the terms of the original lease continue to be acceptable to the lessor, the parties may elect to amend the existing lease to extend the primary term, rather than entering into a new lease. This form addresses that situation.
Indiana Amendment to Oil and Gas Lease to Extend Primary Term
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Multi-State
Control #:
US-OG-084
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Word;
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How to fill out Amendment To Oil And Gas Lease To Extend Primary Term?
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FAQ
Once granted, an oil and gas lease gives the lessee a primary term ranging from 5 to 10 years, depending on water depth, to explore and develop the lease. A lessee must relinquish the lease if no activity has occurred within that specified amount of time.
A mineral lease is a contractual agreement between the owner of a mineral estate (known as the lessor), and another party such as an oil and gas company (the lessee). The lease gives an oil or gas company the right to explore for and develop the oil and gas deposits in the area described in the lease.
The primary term on average is 3 years. Companies can add a 2-year extension if they wish. The company that executed the lease uses this time period to achieve drilling the well. Once that is completed, the secondary term begins and lasts for as long as the well is producing.
What is an Assignment Of Oil And Gas Lease? An assignment of oil and gas lease is a contractual agreement between a landowner and an oil or gas company in which the company gains the right to explore for, develop, and produce oil and gas from the property.
The primary term is the initial period during which a well may be drilled. If a successful well is drilled within the primary term, the lease will extend for as long as the well remains productive. If a well is not drilled within the primary term, the lease will usually expire.
If the lessee is engaged in drilling operations at the expiration of the primary term of the lease,[9] the lease term will be extended for an additional two years if certain requirements are met. [10] Actual drilling operations that penetrate the earth are required.
As long as the lessee pays the annual rent, the lease remains in effect. This definite period of time is called the primary term. When a company fails to start production, the lease expires after the primary term. When the company starts drilling for oil and gas, the lease will remain in effect past the primary term.
in clause (or shutin royalty clause) traditionally allows the lessee to maintain the lease by making shutin payments on a well capable of producing oil or gas in paying quantities where the oil or gas cannot be marketed, whether due to a lack of pipeline connection or otherwise.
