Minimum Drilling Commitment

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Minimum Drilling Commitment

 

A mineral owner with large contiguous holdings may have an interest in negotiating a minimum drilling commitment.  Sample language for a minimum drilling commitment is set out below:

 

Minimum Drilling Commitment

 

a.        This Lease shall continue during the Primary Term for so long and only so long as Lessee drills at least the following oil or gas wells on the Leased Premises or on land pooled therewith during the Primary Term of the Lease:

 

First 12 Months – 25 wells

 

Second 12 Months – 25 wells

 

Third 12 Months – 25 Wells

 

Fourth 12 Months – 25 Wells

 

Fifth 12 Months – 25 Wells

 

b.        If Lessee fails to meet the Minimum Drilling Commitment set forth in this Section 2 of the Lease for any twelve month period, this Lease shall terminate at the end of such twelve month period as to all portions of the Leased Premises not then located within an existing drilling and production unit.

 

c.        Lessee shall complete or cause to be completed all wells drilled on the Leased Premises or on lands pooled therewith with no cessation of operations of more than ninety (90) days from the commencement.  The term “complete” as used herein shall mean to render such well capable of producing oil and/or gas in paying quantities.

Copyright 2011 by Edward G, Hawkins. All rights reserved.