Lease Hold

Can Chesapeake hold a lease if they have applied for a permit, but the city of Mansfield, Texas will not allow the well to be drilled?

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Oil & Gas ProPermalink Reply by Skip Peel - Mineral Consultant on May 27, 2015 at 4:57

A standard form oil & gas lease, no matter the lessee or the operator, is effective for the primary term of the lease and ends only when that ending date is reached without a well being spud, production established or on going continuous "operations" covered under a specific clause in the lease.  The City of Mansfield can nor override state regulations. 

Permalink Reply by Big Sky Mineral Trust on May 27, 2015 at 6:14

Thanks Skip. Forgot to mention the lease was signed in 2007 for a 3 year term with a 2 year extension. Chesapeake acquired the lease from Circle Energy.  Every once in a while I get a letter from Chesapeake about how they filed a permit but Mansfield will not let them drill for spacing reasons. 


Oil & Gas ProPermalink Reply by Skip Peel - Mineral Consultant on May 27, 2015 at 12:33

I think you should inform CHK that their lease has expired and you want them to record a Release of Lease in the public record.  Permits do not hold leases in force.

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