This year marks the end of the three-year primary terms of many oil and gas leases acquired when the Eagle Ford Shale oil and gas play blossomed in South Central Texas. Now, in-house counsel for the mineral lessees must scrutinize those leases carefully to confirm what operations their companies must undertake to extend those leases into their secondary terms by production or drilling.
Traditional oil and gas leases provide for a fixed primary term of years, followed by a secondary term in which the lessee may maintain the lease indefinitely by production. Typical savings clauses allow the lessee to cure brief interruptions in production by conducting drilling or reworking operations at specified intervals until production is restored. Under the traditional operator-oriented lease forms, production anywhere on the leased premises maintains the leased rights to all land and depths originally described in the lease.
