I need a legal definition of “drilling operations”. Many leases are extended in term if the gas company is doing drilling operation. What does this actually mean? Is the seismic testing drilling operation…Is building the road to construct a drilling pad drilling operations? thanks paul
Do you already have a lease and you are trying to determine the legality of the actions of the gas company or are you trying to put a leaee together with a gas company?
I agree that Peter’s definition is a “starting point” but I seriously hope that your lease doesn’t use that verbage because if they do, they can keep you on a hook for a very long time. I’ve seen drill sites get surveyor stakes, and then more than a year later they grade a little ground and then awhile later still they work on a road and thereby fulfill the “Drilling Operatrions” obligations of the lease without defaulting.
When we did our lease, we made sure that the Drilling Operations portion of the lease required that they had to drill a performing well within the primary term. That prevented them from just putting up a water well drilling rig and punching a hole in the ground and said, “See - we’re drilling!”
Paul, You’ve asked a question that has been bantered about this industry for a very long time. Numerous times there have been arguments regarding just “when” drilling begins. Over the years, expert lease drafters have developed language that gets very specific about what constitutes “drilling operations”, and include this language in leases. It takes someone who understands all the details about how a well is drilled in order to draft language that defends against all the ways a driller (Operator) can claim to have started “drilling operations”. In short, Jim is correct, that the phrase “drilling operations” is too broad of a phrase, and should be avoided.
In negotiating oil and gas leases, if there is a significant (to you) amount of economic value at stake, get qualified professional help. Remember, when you purchase quality, you only cry once. I have seen far to many mineral owners cry for a long time due to their attempts to negotiate leases on their own.
As many have noted, this is a point of concern. As to the law in Pennsylvania, I have no idea. There is likely case or codified law on the subject. I am assuming that you are interested in PA law, since that is your location.,
I can suggest that you first refer to the lease itself.
For example, a typical form might read, “…and as long thereof as operations for drilling are prosecuted with no…”
This language (as settled in Texas courts) means that the staking of a well is sufficient, as long as the other operations are prosecuted as a reasonable prudent operator would do.
Another form might read,"…and as long thereof as drilling operations are prosecuted with no…"
This language (as settled in Texas courts) means that actual drilling must be started.
To answer your specific question as to seismic work, no, seismic work is not a drilling operation.
If you contact a oil and gas lawyer concerning this question, please post what you find out here, so we can all become better informed as to PA law.
No, seismic testing is not considered a drilling operation. Yes, in general, building the road, or beginning to build the road, to the pad site is considered a drilling operation. The devil is in the details. Seek legal advice.