Addressing Critical Issues in Maintaining Oil and Gas Leases in a Chaotic Environment

Most of us are familiar with the basic framework of an oil and gas lease. When cessation of production occurs after the end of the primary term, the lease automatically terminates by operation of the habendum clause which provides that the lease will be effective for a term of years “and for so long thereafter as there is production from the leased premises.” The habendum clause creates for the operator a “determinable fee” (as opposed to a fee interest) in that the estate granted to the operator is not perpetual but will terminate upon the happening of a particular event (e.g., the cessation of production or no production).