Generally this request will be made when one of the following situations have occurred:
1. There is no production on a lease previously signed and it has or will soon expire due to lack of production, the lessee’s failure to make timely rental payments, or the lease is reaching the end of its primary term. In such instances, you may be asked to sign an Extension or Renewal.
2. There has been production on the lease, the primary term of the lease has expired, and due to a cessation in production, or a lack of production in paying quantities or workover/drilling operations, the lease is deemed to have expired. You may be asked to sign a Revivor if the lessee wants the right to continue to operate and produce the well or wells under the terms of the old lease. (The Revivor is intended to make the prior lease effective again.)
Whichever situation arises, it should be recognized that a lessor is not required to sign an extension, renewal, or revivor, unless there was a previous agreement to do so. If you do, you may expect to be compensated. In addition, recognize that you are extending, renewing, or reviving a previously granted lease, which may contain terms or provisions now unacceptable.
Negotiations involved in agreeing to grant an Extension, Renewal, or Revivor can include the amount of compensation to be received, changing or amending the terms and provisions in the prior lease. Rather than signing an Extension, Renewal, or Revivor of a prior lease, you may elect to enter into a new lease.
Lease Forms and additional provisions for Oil and Gas Leases that can help with this situation are included in Kanes Oil and Gas Forms available at www.Kanesforms.com. If you encounter this situation, the additional provisions can be added or substituted into the Oil and Gas Lease Form to meet your specific needs.