Get Producers 88

The Standard Producers 88 Oil, Gas, and Mineral Lease, also known as the printed form, is the most widely used access and granting document in use by the Oil and Gas exploration industry in America.

Some people think that their lease will expire no matter what at the end of the 5-year initial term and/or the 5-year extended term. As you've just read, that's not accurate. If the oil and gas company “commences operations,” the oil and gas lease will be effective as long as there is production.

Royalties derived from mineral rights ownership are different than an overriding royalty or revenue from a working interest. Overrides, working interests, production payments and other types of royalties tied to a leasehold generally expire once production ceases.

An oil or gas lease is a legal document where a landowner grants an individual or company the right to extract oil or gas from beneath the landowner's property. Courts generally find leases to be legally binding, so it is very important that you understand all the terms of a lease before you sign it.

If a lease is a "paid-up" lease, then the lease will remain in effect during the entire primary term with no further payments to the Lessor unless and until actual production of oil or gas is established.

If the lessee is engaged in drilling operations at the expiration of the primary term of the lease,[9] the lease term will be extended for an additional two years if certain requirements are met. [10] Actual drilling operations that penetrate the earth are required.

The primary term on average is 3 years. Companies can add a 2-year extension if they wish. The company that executed the lease uses this time period to achieve drilling the well. Once that is completed, the secondary term begins and lasts for as long as the well is producing.