36.25.206    TERM OF LEASE, EXTENSION BY DRILLING OPERATIONS AT END OF TENTH YEAR

(1) The oil and gas lease which shall be issued to the successful bidder therefor shall be granted for a primary term or period of 10 years, and as long thereafter as oil or gas in paying quantities is produced, on condition that all drilling, rental and other obligations are fully kept and performed by the lessee.

(2) If oil or gas is not being produced from the leased premises at the expiration of the primary term of the lease but the owner of the lease or his designee is then engaged in drilling on the premises for oil or gas, then the lease continues in force so long as such drilling operations are being diligently prosecuted. If oil or gas is recovered from any such well drilled or being drilled at or after the expiration of the primary term of the lease, the lease continues in force so long as oil or gas in paying quantities is produced from the leased premises. The board reserves the right to decide whether such drilling operations, which may continue a lease beyond the primary term, are being diligently prosecuted.

History: 77-3-402, MCA; IMP, 77-3-421 and 77-3-422, MCA; NEW, Eff. 12/5/75; TRANS, 1996 MAR p. 2384.