180-day continuous drilling clause

My family has property leased in Dawson and Gaines County. We were offered a new lease on the property that was falling out that's not captured under a producing well. However, today, we were all told that they don't have to do a new lease because they're going to drill another well. The original lease expired about 120-days ago, but when we asked about the expiration, we were told the 180-day continuous drilling clause allows them to keep all the property tied up, not just the land tied to producing well, without renewing the lease. Does this sound right?

You need to review the terms of the lease. Most leases contain a continous drilling clause which comes into effect at end of primary term. If you have a well drilled during the primary term, the CDC will state the number of days from the completion of one well to commencement of next well. If oil company spuds next well within this time, then lease does not terminate. Once CDC ends, then acreage and depths will become unleased. You need to look at primary term date, well completion date, well commencement date. Hopefully your lease defines each of these. For example, well commencement as spud date with rig capable of drilling full depth. Many leases allow oil company to simply move dirt around to qualify.


Clint Liles

Great information, Thank you have a great day.

Wow, Thank you so much.