This form is used in the event any part to this Agreement elects not to participate in a Horizontal Exploratory Well, the non-participating party shall, on commencement of operations for the well, relinquish to the participating party one hundred percent (100%) of its rights, title, and interests in and to that portion of the Contract Area included within the Drilling Unit for the well and one hundred percent (100%) of the party’s rights, title, and interests in and to that portion of the Contract Area.
The Kentucky Relinquishment Provision — Horizontal Well is a crucial aspect of oil and gas exploration and production in the state. This provision is designed to ensure the optimal utilization of resources and encourage the development of horizontal wells, which have revolutionized the industry by allowing access to previously unreachable reserves. In Kentucky, the Relinquishment Provision for Horizontal Wells refers to the regulations and guidelines established by the Kentucky Department of Natural Resources (DNR) regarding the relinquishment requirements for horizontal well drilling permits. These provisions ensure efficient land management and prevent the hoarding of leases by companies without active drilling operations. The primary purpose of the Kentucky Relinquishment Provision — Horizontal Well is to promote energy development and limit leasehold stagnation. It accomplishes this by setting certain time frames and drilling requirements that operators must meet to retain their leases and continue drilling horizontal wells. There are a few different types of Kentucky Relinquishment Provision — Horizontal Well, each with specific criteria and requirements: 1. Primary Term Relinquishment: This provision mandates that the operator must commence drilling operations within a stipulated period (usually 3-5 years) from lease signing. Failure to meet this obligation results in the automatic relinquishment of the lease unless valid reasons for delays are presented. 2. Spacing Unit Relinquishment: Kentucky imposes specific requirements for the spacing of horizontal well units. If an operator fails to commence drilling within the defined spacing unit boundaries within the specified time frame (typically 12 months), the lease within that unit may be automatically relinquished. 3. Continuous Drilling Provision: This provision ensures that once drilling operations have commenced, they should continue without substantial interruption, unless legitimate reasons such as economic or technical issues arise. If an operator halts operations for an extended period (often 120 days), the lease may be forfeited. It is important for operators to understand and adhere to the Kentucky Relinquishment Provision for Horizontal Wells to ensure optimal exploration and production operations. These provisions help prevent the inefficient use of resources and encourage active development, benefiting both the industry and the state's economy.
