Force Majeure
As I understand it, there are expiring leases in production units that have yet to be drilled. Typically, there is a "force majeure" clause which can extend the duration of the lease.
If drilling activity has not been initiated by the by the cessation of the lease, have any of the lessee's attempted to extend their lease using this clause (ie, hurricane, lack of rigs, etc)? Naturally, I would prefer to release with better terms.
Sorry - no STR will be divulged.
If drilling activity has not been initiated by the by the cessation of the lease, have any of the lessee's attempted to extend their lease using this clause (ie, hurricane, lack of rigs, etc)? Naturally, I would prefer to release with better terms.
Sorry - no STR will be divulged.
Views: 55
Replies to This Discussion
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Permalink Reply by barneyfife on
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Force majeure is rarely relied upon. It is also known as an "act of God". Most comapnies would not feel comfortable relying on it except in the most extreme circumstance: hurricane, flood, war, etc. I have been in the business 29 years and have never seen it invoked.
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Permalink Reply by The_Baron on -
We had to invoke it once when a tropical depression dropped over 20 inches of rain and left our location under five feet of water. However it was only used to buy us another 3 or 4 days until the water receeded, as the rig was already moving in.
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Permalink Reply by Grice on
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A question to anyone willing to answer: Would a state of emergency order need to be claimed by the state (or higher authority) before force majeure could be used? If not, what are the standards in which force majeure becomes valid? Is it at the sole discretion of the operator/producer?
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Permalink Reply by Grice on
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Could it be concluded that, if a third party (pipeline supplier) was unable to fill the orders needed for the completion of any takeaway lines (due to contract disputes), producers could claim force majeure, and a lease could be held (without production) for as long as the pipeline equipment is unavailable? While it has been noted that this clause is rarely used, I am merely trying to consider all possibilities. Thanks.
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Permalink Reply by phaco on
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This is the real substance of my initial question. Lack of pipeline, unavailability of rigs, casing, crews, etc. Could or have any of these "excuses" been deemed sufficient to enforce this clause? Based on the replies to date, I would assume not.
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I believe most companies would try to extend the lease for 30 days or enough time to move a rig on location, rather then rely on a suspect justification for force majeure.I don't believe any land department would want to risk using it unless the situation is extreme, simply because you could not predict how a court would rule.
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