|(a) Forfeiture for failure to drill an offset well.
(1) Duty. See §9.37 of this title, (relating to Offset
Well Obligations & Compensatory Royalties) for a full discussion of the
duty to drill offset wells.
(2) Subject to forfeiture. A lease is subject to forfeiture
if there is a failure or refusal to:
(A) begin the drilling operation required in §9.37 within
the proper time frame set out in that section; or
(B) prosecute this activity as required and as is necessary
to reasonably develop the state land and to protect it against drainage.
(b) Forfeiture for other breaches. Other circumstances under
which a state oil and gas lease may be forfeited are determined by certain
provisions in each lease or by the laws of the state.
(1) When sufficiently informed of facts which subject a lease
to forfeiture, it shall be the commissioner's policy to mail notice that the
lease is being considered for forfeiture to those then shown in GLO records
as the current lessee of the lease; and allow the lessee 30 days in which
to present evidence and convince the commissioner that the commissioner should
not forfeit the lease. The commissioner may, however, forfeit a lease without
this prior notice in circumstances where the commissioner deems such action
necessary to protect the best interest of the state. Failure of the commissioner
to send this prior notice, or failure of the appropriate parties to receive
this prior notice, will not in any way affect the validity of the forfeiture
itself. However, upon any forfeiture, the lessee may request a reinstatement
of the lease as set out in subsection (d) of this section.
(2) When sufficiently informed of facts which subject
a lease to forfeiture, it is within the commissioner's discretion to forfeit
that lease by endorsing the following on the mineral file:
(A) words declaring the lease forfeited;
(B) the commissioner's signature; and
(C) the date these actions are taken.
(3) Upon such endorsement, the lease and all rights
and payments made thereunder shall be deemed forfeited.
(4) Promptly after forfeiture, the GLO shall mail notice
of this action to those then shown in the GLO records as the current lessees
of the lease and, in the case of Relinquishment Act land, to the surface owners
then shown in the GLO records.
(1) Within 30 days of forfeiture for failure to drill an offset
well and upon satisfactory evidence of future compliance with the applicable
laws, the commissioner has the discretion to reinstate the lease upon the
terms required by law and upon any other terms the commissioner may prescribe.
(2) For forfeitures due to other breaches, the commissioner
has the discretion to reinstate the lease at any time before the rights of
another intervene. Upon satisfactory evidence of the lessee's future compliance
with the applicable laws, and with any other term the commissioner may prescribe,
the lease may be reinstated.