Lease question from a Newbie

Forgive my ignorance…I am very new to the oil/gas industry and trying to learn as much as I can quickly!

I need help understanding a lease that involves minerals. If there is an existing lease for minerals that is for a primary period of 3 years and has a 2 year extension clause with payment of the same bonus as was originally paid what happens after the 5 years…assuming there is an active well. Does the lease just go on until that well is plugged…with no further consideration?

Thanks for your help!

Welcome to the forum! Every question is important! If you read the existing lease, it will have the time frame listed in it. If the well is drilled in the first time frame (called the primary term) and it is productive, then the option to renew is not needed. The productive time frame is called the secondary term. Most leases have a clause similar to “It is agreed that this lease shall remain in force for a term of __________ years from date (herein call primary term) and as long thereafter as oil or gas. or either of them, is produced from said land by the lessee.” If that well ceases to produce but another is drilled within the designated time frame (usually 90-180 days), then the lease will continue. Our family has leases that are 100 years old.

If no well is drilled in the first time frame, then the operator has the option, but not the obligation to extend the lease for the option time frame (often two years). If a well is drilled and is productive within that time frame, then the lease continues under its terms.

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Thanks for the explanation!

This lease was signed in December 2017 and is for minerals located in Oklahoma, McClain County - S25, 6N, 4W. My understanding is there are wells in that section but my family hasn’t received any payments. Are we due payments from all the wells in that section or just certain ones?

To get paid, the acreage must be in the spacing unit of the wells. Casillas has a horizontal well called the Whetstone that has spacing for 640 acres. Contact their Division Order department.
CASILLAS OPERATING LLC PO BOX 3668 TULSA, OK 74101-3668 918-582-5310 WHETSTONE 1-25-36-WXH

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