Reeves County - 3 yr. Lease and Option for 2 yrs

H&GN Sec 52 Blk 4 Leased until Oct 2017 A well started drilling a few months ago.

What happens when the lease is up this October? Does the drilling company have to pay another bonus?

if the well is productive in economic quantities, you will receive royalty payments and the lease is "held by production." No more leasing until the well is abandoned.


James is correct. If the oil company drills a well during the primary term of the lease and that well produces it will be "Held by Production (HBP)". As long as a well is producing on the lease it will remain valid. Now if you have a "pugh" clause in your lease it might release some of your acreage. But generally it will remain valid until production stops, I don't want to confuse you too much with the pugh clause language.

Let me know if you have anymore questions.