DRILLING TO DISCOVERY Clause Samples
The "Drilling to Discovery" clause defines the obligations and procedures for continuing drilling operations until a specified discovery, such as oil, gas, or minerals, is made. Typically, this clause requires the operator to drill a well to a predetermined depth or geological formation unless valuable resources are found earlier, at which point operations may be adjusted or halted. Its core function is to ensure that exploration activities are carried out thoroughly and systematically, reducing ambiguity about when drilling should stop and helping to allocate operational risk between parties.
DRILLING TO DISCOVERY. Within six (6) months after the effective date hereof, the Unit Operator shall commence to drill an adequate test well at a location approved by the AO, if on Federal land, or by the Land Commissioner, if on State land, and by the Division if on Fee land, unless on such effective date a well is being drilled in conformity with the terms hereof, and thereafter continue such drilling diligently until the The AO and Land Commissioner may modify any of the drilling requirements of this section by granting reasonable extensions of time when, in their opinion, such action is warranted. Upon failure to commence any well as provided for in this section within the time allowed, prior to the establishment of a participating area, including any extension of time granted by the AO and the Land Commissioner, this agreement will automatically terminate. Upon failure to continue drilling diligently any well commenced hereunder, the AO and the Land Commissioner may, after fifteen (15) days notice to the Unit Operator, declare this unit agreement terminated. The parties to this agreement may not initiate a request to voluntarily terminate this agreement during the first six (6) months of its term unless at least one obligation well has been drilled in accordance with the provisions of this section. Until the establishment of a participating area, the failure to commence a well subsequent to the drilling of the initial obligation well, or in the case of multiple well requirements, if specified, subsequent to the drilling of those multiple ▇▇▇▇▇, as provided for in this (these) section(s), within the time allowed including any extension of time granted by the AO and Land Commissioner, shall cause this agreement to terminate automatically. Upon failure to continue drilling diligently any well other than the obligation well(s) commenced hereunder, the AO and Land Commissioner may, after 15 days notice to the Unit Operator, declare this unit agreement terminated. Failure to commence drilling the initial obligation well, or the first of multiple obligation ▇▇▇▇▇, on time and to drill it diligently shall result in the unit agreement approval being declared invalid ab initio by the AO and Land Commissioner. In the case of multiple well requirements, failure to commence drilling the required multiple ▇▇▇▇▇ beyond the first well, and to drill them diligently, may result in the unit agreement approval being declared invalid ab initio by the AO and Land Commissioner.
DRILLING TO DISCOVERY. Within 6 months after the effective date hereof, the Unit Operator shall commence to drill an adequate test well at a location approved by the AO, unless on such effective date a well is being drilled in conformity with the terms hereof, and thereafter continue such drilling diligently until the lll formation has been tested or until at a lesser depth unit- ized substances shall be discovered which can be produced in paying quantities (to wit: quantities sufficient to repay the costs of drilling, completing, and producing oper- ations, with a reasonable profit) or the Unit Operator shall at any time establish to the satisfaction of the AO that further drilling of said well would be unwarranted or impracti- cable, provided, however, that Unit Operator shall not in any event be required to drill said well to a depth in excess of ll feet. Until the discovery of unitized substances capable of being produced in paying quan- tities, the Unit Operator shall continue drill- ing one well at a time, allowing not more than 6 months between the completion of one well and the commencement of drilling operations for the next well, until a well ca- pable of producing unitized substances in paying quantities is completed to the satis- faction of the AO or until it is reasonably proved that the unitized land is incapable of producing unitized substances in paying quantities in the formations drilled here- under. Nothing in this section shall be deemed to limit the right of the Unit Oper- ator to resign as provided in Section 5, here- fective in order to comply with the require- ments of this section. The AO may modify any of the drilling re- quirements of this section by granting rea- sonable extensions of time when, in his opin- ion, such action is warranted.
DRILLING TO DISCOVERY. Fnr the purposes ~nf this Unit Agreement, the Encana Lvbrook H26 2307 01H well’with a surface location io tfaeSE4NE4 of Section 26, Township 23 North, Range 7 West, with a 4,285 fool horizontal lateral in the Mancos Shale Group located S2N2 of said Section 26, which was commenced on December 6,2012 and completed on February 12,2013, shall hereby be approved by the AO. FIMO, the Land Commissioner and the Division as the obligation well necessary to validate this Unit Agreement (Initial Well). In addition, the following casting horizontal ▇▇▇▇▇ are within tbe boundaty of the Unit Agreement arid were drilled and completed to produce unitized substanc® subsequait to the effective date of this Unit Agreement and subsequst to the completion of the Initial Well (Existing ▇▇▇▇▇): the Encana Lvbrook H26 2307 02H well in ihe SE4NE4 of Section 26, Township 23 North. Range 7 West,' N.M.P.M., with a 4,385 foot horizontal lataal in the Mancos Shale Group located in the S2N2 of said Section 26, commmced on December 22, 2012 and completed February 12, 2013, lateral plugged and sidetrack operation commaiced July 3,'2014 on the well then named ^jJjjg2jj_H2^_2322^1iLSl2S!£!!> with a new sidetrack lateral of 4,416 foot horizontal lateral in the Mancos Shale Group located in S2N2 said Section 26 which was complete! August 28,2014; and the Encana Lvbrook E33 2307 OIH well in the SW4NW4 of Section 33, Township 23 North, Range 7 West, N.MJLM,' with a 3,556 foot horizontal lateral in the Mane® Shale Group located in the N2N2 of Section 32 Township 23 North, Range' 7 West, N.M.P.M which commenced August 22,2014 and completed October 16, 2014 : and ihe Encana LvfanwkL33 2307 OIH well in the NW4SW4 of Section 33. Township 23 North, Range 7 West, N.M.P.M. with a 4,568 foot horizontal lateral in the Mancos Shale Group located in theN2S2 ofSection 32,' Township 23 North, Range 7 West, N.M.P.M commenced August 22,2014 and completed October 19.2014: and ihe Encana Lvbrook E33 2307 02H well in the SW4NW4 ofSection 33. Township 23 North. Range 7 West, N.MP.M, with a 4,529 foot horizontal lateral in tbe Mancos Shale Group located in the S2N2 of said Section 32, Township 23 North, Range 7 West, N.M.P.M commenced September 4, 2014 and completed October 24, 2014; and the Encana Lvbrook P32 2307 01H well in the SW4SW4 of Section 32, Township 23 North, Range 7 West, N.M.P.M.' with a 4,197 foot' horizontal lateral in the Mancos Shale Group located in the S2S2 of North Alamito Unit Agreement (Unlea...
DRILLING TO DISCOVERY. For thepuiposes of this Unit Agreement, the Encana ▇▇▇▇▇▇▇ P24 226 01H well with a surface location in the SESE ofSection 24, Townsltip 22 North, Range 6 West, N.M.P.M, and a 4,269 foot horizontal lateral in the Mancos Shale Group located iu (be S2S2 of Section 24, which Unit Operator commenced on April 9, 2014 and completed on May 12. 2014 shall hereby be approved by the AO, if on Federal land, or the Land Commissioner, ifon Stale Land, as the obligation well necessary to validate this Unit Agreement (Initial Well). Within six
DRILLING TO DISCOVERY. The unit operator shall, within sixty (60) days after the effective date of this agreement, commence operations upon an adequate test well for oil and gas upon some part of the lands embraced within the unit area and shall drill said well with due diligence to a depth sufficient to attain the top of the Any well commenced prior to the effective date of this agreement upon the unit area and drilled to the depth provided herein for the drilling of an initial test well shall be considered as complying with the drilling requirements hereof with respect to the initial well. The Commissioner may modify the drilling requirements of this section by granting reasonable extensions of time when in his opinion such action is warranted. Upon failure to comply with the drilling provisions of this article the Commissioner may, after reasonable notice to the unit operator and each working interest owner, lessee and lessor at their last known addresses, declare this unit agreement terminated, and all rights privileges and obligations granted and assumed by this unit agreement shall cease and terminate as of such date.
DRILLING TO DISCOVERY. Within six (6) months after the effective date hereof, the Unit Operator shall commence to drill adequate test ▇▇▇▇▇ at locations approved by the AO, if on Federal land, or by the Land Commissioner, if on State land, unless on such effective date a well is being drilled in conformity with the terms hereof, and thereafter continue such drilling diligently until the Wolfcamp formation has been tested with two (2) one-mile horizontal ▇▇▇▇▇ and the Bone Springs formation has been tested with one (1) one-mile horizontal well as provided in Section 9a which can be produced in paying quantities (to wit: quantities sufficient to repay the costs of drilling, completing, and producing operations, with a reasonable profit) or the Unit Operator shall at any time establish to the satisfaction of the AO if on Federal land, or by the Land Commissioner, if on State land, that further drilling of said well would be unwarranted or impracticable. Nothing in this section shall be deemed to limit the right of the Unit Operator to resign as provided in Section 5, hereof, or as requiring Unit Operator to commence or continue any drilling during the period pending such resignation becoming effective in order to comply with the requirements of this section.
DRILLING TO DISCOVERY. For the purposes of this Unit Agreement, the Encana Escrito L17 2409 01H well with a surface location in the NW4SW4 of Section 17, Township 24 North, Range 9 West, N.M.P.M., and a 4,501 foot horizontal lateral in the Mancos Shale Group located in the N2S2 of Section 18, Township 24 North, Range 9 West, N.M.P.M., which Unit Operator commenced on March 13, 2014 and completed on April 26, 2014, shall hereby be approved by the AO, FIMO, the Land Commissioner and the Division as the obligation well necessary to validate this Unit Agreement (Initial Well). In addition, the Encana Escrito L17 2409 0211 well with a surface location in the NW4SW4 of Section 17, Township 24 North, Range 9 West, N.M.P.M, with a 5,345 foot horizontal lateral in the Mancos Shale Group located in the S2S2 of Section 18 Township 24 North, Range 9 West, N.M.P.M.; and the Encana Escrito L18 2409 01H well with a surface location in the NW4SW4 of Section 18, Township 24 North, Range 9 West, N.M.P.M, with a Good Times Unit Agreement 2 5,14! foot horizontal lateral in the Mancos Shale Croup located in the N2S2 of Section 13, Township 24 North, Range 10 West, N.M.P.M; and the Encana Kscrito LIS 2409 02H well with a surface location in the NW4SW4 of Section 18, Township 24 North, Range 9 West, N.M.P.M. with a 5,068 foot horizontal lateral in the Mancos Shale Group located in the S2S2 of Section 13, Township 24 North, Range 10 West, N.M.P.M are all three existing horizontal ▇▇▇▇▇ located within the boundary of the Unit Agreement which were drilled and completed in the Unitized formation subsequent to the effective date of this Unit Agreement and subsequent to the completion of the Initial Well (Existing ▇▇▇▇▇). Within six (6) months after final approval of this Unit Agreement, the Unit Operator shall submit a paying well determination report for the Initial Well to the AO to determine if the Initial Well can be produced in paying quantities (to-wit: quantities sufficient to repay the costs of drilling, completing, and producing operations, with a reasonable profit) If the Initial Well is not capable of producing in paying quantities, then, Unit Operator shall submit a paying well determination report to the AO for the first of the Existing ▇▇▇▇▇ which commenced after the Initial Well, and likewise thereafter, each succeeding Existing Well drilled until it is determined that one of the Existing Well(s) is capable of producing in paying quantities. If paying well determination reports have been sub...