What is the difference in a formation and a zone? For example, is the Mississippian a zone within the Meramec formation? I understand why the old “100 feet below” wording is no longer adequate for horizontal well.
In Oklahoma, would the following clause be a good one to use or, for example, should it say “zone” instead of “formation”?
“Partial Release of Formations: If this lease is being held by production, at the end of the primary term hereof this lease shall automatically terminate as to all depths except for the formation(s) then producing in paying quantities from any well drilled in accordance with this lease as to each separate unit as hereinabove described; provided, however, if Lessee has commenced operations for the drilling of a well within the primary term of this lease, on a properly spaced unit, Lessee shall have the right to drill said well to total depth and complete said well prior to this provision becoming effective.”
Know the lease would also need a commencement clause. Would appreciate any other comments or suggestions anyone can give me.
It is worth a try, but most lessee’s want to keep any zones/formations that are penetrated by the drill bit simply because they paid for it.
The 100’ below the base of deepest penetrated formation is still applicable and you will see the term TVD, which means true vertical depth.
As for your example, the Meramec formation (series) is part of the Mississippian System, as are the Chester & Osage. Those are then delineated further into Goddard, Caney, Sycamore, etc, depending on your geographical location.
Commencement example:
Commencement of Well: Commencement of any well according to the term of this lease shall require that a drilling rig capable of drilling such well to the projected total depth for such well be on location and drilling on or before the expiration of the primary term or any other applicable time period hereunder and that the drilling of and other operations on such well be continued with due diligence in a reasonable, prudent manner until completion of such well in one or more formations. Construction of a well location or road or any other physical activity on the Leased Premises, or on any lands pooled, communitized or unitized therewith, without actual drilling operations being conducted with a drilling rig capable of drilling such well to the projected total depth of such well shall not be deemed commencement of a well under this lease.