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Permalink Reply by DJG on October 5, 2010 at 6:20

I've seen many recent leases filed here in TX where the O&G has their definition of "operations" stated in terms clearly to their own favor (i.e. including things such as pad-site preperation, road prep, surveys, etc).

Definately recommend that folks take a look at their own individual leases to see what may or may not be defined as "operations" as it is not necessarily the default interpretation that it means "spud date" or when drill bit hits the ground.

For those still negotiating your lease terms, would recommend that you have some clear wording as to what you agree to as far as defining what "operations" will hold the lease.

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Permalink Reply by Shaley on October 7, 2010 at 4:10

Be careful here folks. The best answer to the question is "it depends". It all depends on the language in the lease as to what can be classified as operations to maintain the lease. In some cases, building the location is sufficient. In other cases it may take "actual drilling operations" which is normally defined as having a rig on location that is capable of drilling the well to total depth and spudding the well (i.e. "turning to the right"). Every situation is different and each has to be judged on the facts in any particular situation.

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