PIOGA Press: In Pennsylvania, does ‘production’ really mean ‘production in paying quantities?’ by Attorney Alison Bush
Oil and gas leases typically contain a “habendum clause” which governs the term of the lease. Most habendum clauses provide for a primary and a secondary term. The primary term is a fixed period of time within which the lessee may hold the leasehold without being required to develop it. To prevent the lease from expiring at the end of the primary term, the lessee must act to propel the lease into its secondary term. One way a lease can be extended into its secondary term is if oil or gas, or both, is produced “in paying quantities.” Under such a lease, the secondary term will continue until oil and gas are no longer produced in paying quantities. Read the full article Pages from PIOGA_Press_050_June_2014.