Shut-In Xxxxx; Lease Extension. If Lessee has completed a natural gas well on the Leased Premises that is capable of producing natural gas in paying quantities, but is prevented from producing natural gas by market conditions or lack of a pipeline connection for disposition of the natural gas, Lessee shall be deemed to be engaged in diligent operations for the purposes of extending this Lease beyond the primary term, subject to payment of annual minimum royalties pursuant to paragraph 2.2 of this Lease. The determination of whether a shut-in well is capable of producing in paying quantities, or whether market conditions or lack of pipeline connections prevent production, shall be vested in Lessor in its sole discretion. Lessee shall pay minimum royalties for a properly shut-in natural gas well for so long as the Lease is in effect. Any natural gas well that remains shut-in for five (5) consecutive years beyond the end of the primary term of this Lease shall be plugged and abandoned in accordance with the applicable regulations of the Utah State Division of Oil Gas and Mining, and this lease shall terminate, unless Lessee requests a further extension at least 90 days prior to the end of such five (5) year period, and Lessor, in its sole discretion, elects to grant an extension.
Shut-In Xxxxx; Lease Extension. If Lessee has completed a natural gas well that is producing in paying quantities, but is thereafter prevented from producing natural gas because of market conditions or lack of pipeline or other transportation method, in each case, through no fault of Lessee, and that well is the only producing well on the Leased Premises or lands pooled or unitized therewith, this Lease will be extended beyond the primary term, subject to payment of annual minimum royalties pursuant to paragraph 2.2 and the remaining terms of this Lease. The determination of whether a shut-in well is capable of producing in paying quantities, or whether market conditions or lack of transportation prevent production, shall be vested in Lessor in its sole discretion and reviewed on a yearly basis. Lessee shall pay minimum royalties for a properly shut-in natural gas well for so long as the Lease is in effect. Notwithstanding the foregoing, no well may remain shut-in for longer than five (5) consecutive years. If a shut-in well is shut- in for five (5) consecutive years, it must be plugged and abandoned in accordance with the applicable regulations of the Utah State Division of Oil Gas and Mining (“UDOGM”), and if such well is the only well capable of extending this Lease, this Lease will terminate, unless Lessee requests a further extension at least 90 days prior to the end of such five (5) year period, and Lessor, in its sole discretion, elects to grant an extension.
