I have a lease proposal that I am having a hard time comprehending the lease terms. Any help would be appreciated:
At the expiration of the primary term of this lease or at the end of the extended period for continuous development provided below, whichever is later, this lease shall terminate SAVE and EXCEPT for (i) eighty (80) acres of land plus a tolerance of ten percent (10%) surrounding each vertical oil well, (ii) three hundred twenty (320) acres plus a tolerance of ten percent (10%) around each vertical gas well producing or capable of producing in commercial quantities above 6,000 feet, (iii) six hundred forty (640) acres plus a tolerance of ten percent (10%) around each vertical gas well producing or capable of producing in paying or commercial quantities from depths below 6,000 feet; (iv) the amount of acreage for each horizontal well (either oil or gas) producing or capable of producing in paying quantities, calculated using the formula provided for in Paragraph 20 below and (v) all lands included in a pooled unit created under authority granted in Paragraphs 4 and 19.1 above and Paragraph 20 below, the point of production for purposes of determining the amount of acreage which Lessee may allocate to each well shall be the deepest producing or shut in perforation on the effective date of the release or partial release called for in this Paragraph. In the event the Railroad Commission of Texas (or other governmental authority having jurisdiction) requires, as opposed to permits, pursuant to special field rules, the allocation of larger tracts of land or units to any such producing well in order to obtain the maximum production allowable, then this lease shall continue in force and effect as to the amount of acreage surrounding each well required to obtain the maximum production allowable. At such time, this lease shall also terminate as to all rights, strata and horizons situated below one hundred feet (100’) below the stratigraphic equivalent of the deepest depth drilled in a well or wells drilled, producing and located on the leased premises or on lands pooled therewith. Lessee shall, within one hundred twenty (120) days after the expiration of this lease or parts hereof, file of record in the office of the County Clerk in the County or Counties in which said lands are located, an instrument releasing this lease insofar as this lease has terminated, specifically describing the retained tracts surrounding each producing well.
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Andrew,
Thanks for your perspective. Interesting. There are so many facets to this that it really takes a discussion like this to sort out what the possibilities are.
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