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How long are oil leases good for?

The primary term of a federal oil and gas lease is 10 years. The term is extended as long as the lease has at least one well capable of production.

How does oil leases work?

Oil leases are agreements between an oil and gas company known as the lessee and mineral owners known as a lessor, in which the lessor grants the lessee the permission to explore, drill, and produce those minerals for a specified period known as a primary term or as long as the minerals continue to be productive.

What is a primary term in oil and gas lease?

The primary term is the initial period during which a well may be drilled. If a successful well is drilled within the primary term, the lease will extend for as long as the well remains productive. If a well is not drilled within the primary term, the lease will usually expire.

How does an oil lease work?

A mineral lease is a contractual agreement between the owner of a mineral estate (known as the lessor), and another party such as an oil and gas company (the lessee). The lease gives an oil or gas company the right to explore for and develop the oil and gas deposits in the area described in the lease.

What is a leasehold in oil and gas?

Leasehold interest in oil and gas most often refers to the company leasing the mineral rights and required surface access that assumes the risk of exploration and the expenses of production.

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