The dry-hole clause in an oil-and-gas lease outlines the requirements for the lessee to retain the lease if a well drilled does not yield any oil or gas. Typically, the clause stipulates that the lessee can maintain the lease by continuing to pay rent for the remaining duration of the lease.
A dry-hole clause in an oil-and-gas lease outlines the requirements for a lessee to maintain the lease after drilling an unproductive well. It specifies that the lessee must continue to pay rent for the remainder of the primary term to keep the lease active. This clause ensures that the lessor continues to receive compensation for the use of their land, even if no oil or gas is extracted.
A dry-hole clause is a provision in an oil and gas lease that allows the lessee to terminate the lease if no oil or gas is found after drilling a well.
A dry-hole clause protects the lessee from being obligated to continue paying for a lease that is not producing any oil or gas.
Yes, a dry-hole clause can be negotiated between the lessor and lessee before signing the lease agreement.
If a dry-hole clause is triggered, the lessee is typically released from any further obligations under the lease.
No, a dry-hole clause is not standard in all oil and gas leases. It is typically negotiated between the parties.
Yes, a dry-hole clause can be waived by the lessee if they choose to continue paying for the lease even if no oil or gas is found.
A dry-hole clause can protect the lessor from having a non-producing well on their property and can ensure that they receive compensation for the use of their land.
Yes, a dry-hole clause can be added to an existing lease through a lease amendment.
If a dry-hole clause is not included in a lease, the lessee may be obligated to continue paying for the lease even if no oil or gas is found.
Yes, a dry-hole clause can be enforced in court if it is included in the lease agreement and the lessee triggers the clause.
This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.
This glossary post was last updated: 17th April 2024.
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