Depth Clause Wording

Oklahoma Mineral Rights McClain County, OK
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I would like to know if anyone can see anything unusual about the wording of this Depth Clause: Upon the expiration of the primary term, this lease shall automatically terminate as to all rights lying one hundred (100) feet below the base of the stratigraphic equivalent of the deepest penetrated common source of supply in any well drilled on the leased premises or on lands pooled therewith; provided however, if Lessee is then engaged in operations on the leased premises or on lands pooled therewith, this lease shall remain in full force and effect as to all depths so long as no more than ninety (90) days elapse between said operations.

This was the depth clause wording of my original Indultado well lease. I am interested in the opinion of those with more experience than myself. Tks, N

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The wording of that depth clause is not unusual, but it is not in favor of the mineral owner. The word “penetrated” and “base of the stratigraphic equivalent” stretch it farther than the mineral owner would probably like. If the original well penetrates the top of a reservoir (common source of supply), then it holds the entire reservoir. If they drilled 10’ into it and it is 2000’ thick, then it hold all 2000’ (extra 1990’ was never drilled) plus another 100’ below that. Not optimal wording for the mineral owner but great for the operator.

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NBH- The problem with your depth clause is that Casillas drilled into the Mississippi formation so the lessee retains all rights 100’ below the base of the Mississippi formation which happens to be the top 100’ of the Woodford formation. Therefore, your current lease is valid from the surface to 100’ below the top of the Woodford formation. Casillas has drilled the 2nd Mississippi well (the Indultado 3MXH) and the 1st Woodford well (the Indultado 2WXH). I don’t know if this 2WXH well is in the lower portion (below the top 100’) or upper portion (top 100’) of the Woodford formation. Casillas has not drilled the 2nd Woodford well yet. Casillas is pooling the Woodford formation now as it was not named in the original pooling, but will only cover your interest in the Woodford that is below the top 100’. As for wording, I am not an attorney so I can’t tell you want to use. If it were me, I would consider using language that does not include anything having to do with “100’”. So maybe “This lease is limited to the Woodford formation ONLY” might work? Completion is beginning any day now on the 3MXH well. Hope this helps. Todd M. Baker

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