Modern oil and gas leases often contain provisions that have come to be known as “retained acreage” clauses. Such clauses require the lessee to release acreage not assigned to a producing well at the end of the primary term, or at the end of a continuous drilling program conducted after the primary term. One commentator has said that the purpose of a retained acreage clause is to “replace the lessor’s need to utilize the implied covenant of reasonable development as the sole means to see that its acreage is fully developed.” Bruce M. Kramer, Oil and Gas Leases and Pooling: a Look Back and a Peek Ahead, 45 Tex. Tech L. Rev. 877, 881 (2013).
There is no standard form of retained acreage clause. Lawyers representing lessors have developed their form of the clause, and the clause is often one of the most heavily negotiated provisions of an oil and gas lease.
Two court opinions have recently construed retained acreage clauses.
In ConocoPhillips Company v. Vaquillas Unproven Minerals, Ltd., 2015 WL 4638272 (Tex.Ct.App.-San Antonio Aug. 5, 2015), the lease provided that, at the end of the lessee’s continuous drilling program,
Lessee covenants and agrees to execute and deliver to Lessor a written release of any and all portions of this lease which have not been drilled to a density of at least 40 acres for each producing oil well and 640 acres for each producing or shut-in gas well, except that in case any rule adopted by the Railroad Commission of Texas or other regulating authority for any field on this lease provides for a spacing or proration establishing different units of acreage per well, then such established different units shall be held under this lease by such production, in lieu of the 40 and 640-acre units above mentioned.