Lease Continuations Beyond Primary Term
PrairieSky has a Lease Continuation Application (*updated March 30, 2017 - new application form) form which requests the lessee to provide information pertinent to confirm continuation of leases beyond primary term. While the use of the form is not a requirement under all leases, we have found that using the application form does expedite the continuation process.
Depending on the specific terms of the lease, the formations eligible for continuation may either be those individual formations with active operations (formation based leases) or all formations to the base of the deepest formation with operations (deep rights reversion leases).
Regardless of the type of lease, continuations are based on formations as opposed to a group of formations. For example, a PrairieSky lease at the end of its primary term that is producing from the Sparky formation will only be continued in (or to the base of) the Sparky formation, not in (or to the base of) the Mannville Group.
Further examples of this include the Belly River being a Group consisting of the Oldman, Foremost and Basal Belly River formations; the Edmonton Group typically consists of the Scollard and Horseshoe Canyon formations; and the Mannville Group includes the Colony, Sparky, Rex, Glauconite, Ellerslie, Dina and several other formations.
For any questions regarding the Lease Continuation Application please email LandComplianceInquiries@prairiesky.com.
NOTICE TO LESSEE’S SUBMITTING LEASE CONTINATION APPLICATIONS FOR HZ WELLS IN SASKATCHEWAN
Take note the Government of Saskatchewan’s Directive PNG006 has no application with respect to any setback distances for a HZ well drilled on or within the same lease boundaries of freehold lands other than the 150m inter-well spacing. The 100m setback applies only to the lease boundaries between diversely held Freehold mineral title lands, or Freehold and Crown mineral title lands or diversely-owned Crown disposed mineral leases. Accordingly, unless a pooling and allocation agreement exists for a well drilled within the 100m setback from a diversely owned freehold mineral title boundary, or the provisions of the lease expressly state otherwise, it is PrairieSky’s position and policy that a lease will be continued for only those vertical well drainage/spacing units that are within the ultimate drainage area (being the 75m set back from the productive interval), to allow for the optimized 150m inter-well spacing development of our lands.