This form is used in the event any part to this Agreement elects not to participate in a Horizontal Exploratory Well, the non-participating party shall, on commencement of operations for the well, relinquish to the participating party one hundred percent (100%) of its rights, title, and interests in and to that portion of the Contract Area included within the Drilling Unit for the well and one hundred percent (100%) of the party’s rights, title, and interests in and to that portion of the Contract Area.
The Delaware Relinquishment Provision in relation to horizontal wells is a crucial aspect of oil and gas drilling in the state of Delaware. This provision governs the conditions under which an operator, upon terminating the operation of a well, is required to relinquish the leasehold rights to the unproduced portions of the drilling unit. In Delaware, where horizontal drilling is commonly employed, the primary objective is to maximize the recovery of oil and gas from tight formations such as shale. The Relinquishment Provision was established to ensure that these resources are efficiently exploited, while also promoting fair access to mineral rights for other operators. There are two main types of Delaware Relinquishment Provision — Horizontal Well that operators should be aware of: 1. 10-Year Relinquishment Provision: Under this provision, an operator must relinquish all unproduced acreage within a drilling unit if no production has occurred within ten years from the initial completion or recompletion of the well. This provision aims to prevent the indefinite holding of acreage without production, allowing for the release and subsequent leasing to other interested parties. 2. 25% Drainage Threshold Relinquishment Provision: This provision is triggered when an operator, with an existing well on a drilling unit, obtains a permit for a new well that targets the same reservoir. If cumulative production from all wells on the drilling unit exceeds 25% of the estimated recoverable reserves of the reservoir, the operator must relinquish the unproduced acreage beyond the spacing assigned to the well within one year. Consequently, this provision encourages operators to efficiently produce from existing wells and prevent excessive drainage of reservoirs. It is essential for operators and stakeholders in Delaware's oil and gas industry to understand the implications of these Relinquishment Provisions. Compliance with these provisions fosters fair competition, maximizes resource recovery, and provides opportunities for new participants to explore and develop unproduced areas.The Delaware Relinquishment Provision in relation to horizontal wells is a crucial aspect of oil and gas drilling in the state of Delaware. This provision governs the conditions under which an operator, upon terminating the operation of a well, is required to relinquish the leasehold rights to the unproduced portions of the drilling unit. In Delaware, where horizontal drilling is commonly employed, the primary objective is to maximize the recovery of oil and gas from tight formations such as shale. The Relinquishment Provision was established to ensure that these resources are efficiently exploited, while also promoting fair access to mineral rights for other operators. There are two main types of Delaware Relinquishment Provision — Horizontal Well that operators should be aware of: 1. 10-Year Relinquishment Provision: Under this provision, an operator must relinquish all unproduced acreage within a drilling unit if no production has occurred within ten years from the initial completion or recompletion of the well. This provision aims to prevent the indefinite holding of acreage without production, allowing for the release and subsequent leasing to other interested parties. 2. 25% Drainage Threshold Relinquishment Provision: This provision is triggered when an operator, with an existing well on a drilling unit, obtains a permit for a new well that targets the same reservoir. If cumulative production from all wells on the drilling unit exceeds 25% of the estimated recoverable reserves of the reservoir, the operator must relinquish the unproduced acreage beyond the spacing assigned to the well within one year. Consequently, this provision encourages operators to efficiently produce from existing wells and prevent excessive drainage of reservoirs. It is essential for operators and stakeholders in Delaware's oil and gas industry to understand the implications of these Relinquishment Provisions. Compliance with these provisions fosters fair competition, maximizes resource recovery, and provides opportunities for new participants to explore and develop unproduced areas.
