The following was added to our oil and gas lease, as part of an attached exhibit a.
Drainage. In addition to all other express and implied covenants, in the event that a,well or wells producing oil or gas should be brought in on nearby land and draining the leased premises, or acerage spaced or likely spaced there with, Lesse agrees to drill offset wells as a reasonably prudent operator would drill under the same or similar circumstances.
What does that mean in lay mans terms. Give an example, please I can’t figure out if it is good or bad.
Its in your best interest. Although it states the applicable law on the subject.
As a mineral owner, prior to leasing, you have a right to drill your own well. But, you have leased your interest, or assigned this right to an oil company.
If a well is drilled in a section next to you, and is draining oil or gas from your land, then this provision requires your lessee, if reasonably prudent, to drill a well close (?) to the drained area, so as to prevent some of your oil and gas from being sucked off by the well on the other side of the boundary of the leased tract. As you have leased your interest, you can't drill the well yourself, because you have given up that right. The only one who can drill a well to protect you against drainage is your lessee/oil company.
Under the implied covenant to protect against drainage, the company has that obligation anyway.
Thanks that’s what I thought. Was wondering if this might force them to the other end to the spacing unit in the Bakken. Seems to do the exact opposite.