What should a depth clause in a lease include? Is there an example of a "good" depth clause? Any help is greatly appreciated.
This one can be proved by actual data but you will have a hard time getting it. See second one for the usual one.
DEPTH CLAUSE: This lease shall terminate upon the expiration of the Primary Term as to all rights below a depth of 100 feet below the deeper of the deepest perforation then contributing hydrocarbons to production from any non-horizontal well or the deepest portion of the lateral then contributing hydrocarbons to production from any horizontal well, which non-horizontal well or horizontal well, whichever is applicable, is otherwise producing in paying or commercial quantities and is located on the Leased Premises or in any voluntary unit formed under the provision set forth in the body of this lease or in any drilling and spacing unit or horizontal well unit formed by the appropriate state governmental body. In the event Lessee shall have commenced the drilling of a well, pursuant to the terms of this lease, within the primary term, this provision shall not take effect until such well is completed.
The Usual One is similar to this which is okay....
Depth Clause: In the event this lease is extended by commercial production beyond its primary term, then at the expiration of the primary term this lease shall terminate as to all depths located one hundred feet (100') below the stratigraphic equivalent of the base of the deepest formation producing in the well or wells located on the leased premises, or land spaced or pooled therewith. In the event Lessee shall have commenced the drilling of a well, pursuant to the terms of this lease, within the primary term, this provision shall not take effect until such well is completed.