Leases

General Mineral Rights Discussion
1

I know my lease ends in December. Do leases get renewed when receiving royalties ? Or just royalty payments?

2

If you are receiving royalties, then your lease will not expire. The lease will have a primary term during which the oil company could drill. If production is established, then the lease continues until production ceases. If there are no wells drilled during the primary term, then you can sign a new lease.

3

All depends on the terms and conditions contained in the lease. Are all the lands in the lease producing? If not, does the lease contain a horizontal Pugh Clause? If it does, then any land or minerals that are not producing will expire in December. If the lease has a vertical Pugh Clause then all non-producing formations will expire in December.

Absent a Pugh Clause, your royalty payments will not cease and the lease will remain in full force and effect as long as production continues. Also, keep in mind, that there are various circumstances in which a lease will not expire after production ceases.

4

Thanks. Yes we are receiving royalties. There are currently 3 wells and 2 more permits for 2 more.