I have a lease that expires June 15th. They are currently casing the hole. How far along do they have to be? Here is what my lease reads: "Notwithstanding the provisions of this lease to the contrary, this lease shall terminate at the end of the primary term as to all of the lease lands except those within a producing or capable of producing oil and/or gas or on which lesee is engaged in drilling or re-working operations. However, this lease shall not terminate as to any of the lease lands so long as drilling or re-working operations are being continuously prosecuted, that is, if not more than 1 year shall elapse between the completion or abandonment of 1 well in the beginning of operations for the re-working of the producing well or drilling of another well. "
Does re-working mean casing? Do they need to have a producing well? Can the well be completed in 24 days? Thank you for your input on this.
Kevin, you are held by continuing operations, they have done far more than required to hold you unless your lease has language as a very smart friend of mine suggests that the hole must be spud and turning to the right with a rig on site capable of drilling to target depth. Without that language you would have been held by any lease I have ever seen with a 60, 90 or 180 [ too long ] continuing operations clause. Yours is the first I have heard of that gives the operator 1 year from the last day of a previous effort to try again to gain production. I guess we can be thankful that they weren't thinking big and make the continuing operations clause for 10 years. If you have anything to lease in the future I would keep an eye on that clause. In my opinion 90 days is sufficient and 180 days is generous. The operator doesn't even have to drill a hole, usually. Digging a pit or building a road is usually enough to hold by continuing operations, sometimes some guys in a pickup truck staking the pad area would be considered enough. At least you are getting a well and I hope it does well for you.
So they could walk away for a year and it would hold the lease?