(a) Oil and gas leases shall be for a primary term of five (5) years and as long thereafter as oil or gas may be produced in paying quantities.
(b) The Board may extend the term of an existing undeveloped and non-unitized oil and gas lease for a period not to exceed five (5) years, in one-year increments, if it determines that the lessee has been prevented from drilling because of governmental action or regulation, safety issues to include but not limited to proximity to mining operations, permitted surface activities or habitation, drilling target zone conditions, or other causes beyond the lessee's reasonable control. Rig availability, financing, geological or geophysical reviews, weather conditions, and product pricing shall not be considered as causes beyond the lessee's reasonable control but ordinary to the business. A single extension request may be considered based on weather where the attempt to prudently drill prior to the expiration of the lease primary term was negated by unseasonable weather conditions. - (i) Extensions shall be on the express condition that the lessee commence drilling operations on the leased lands within the extended term and drill the well diligently to completion as a dry hole, producing well, or after commencement of drilling operations loses the hole due to uncontrollable downhole conditions.
- (ii) Unless specifically waived by the Board, lessees must agree to pay liquidated damages if the well is not commenced and completed or unavoidably lost in accordance with the terms of the lease extension. The lessee shall furnish a ten thousand dollar ($10,000) cash bond in the form of a certified or cashier's check made payable to the Office or a ten thousand dollar ($10,000) certificate of deposit in the name of the Office of State Lands and Investments as an amount approved by the Board to secure the payment of such liquidated damages, refundable upon lessee's fulfillment of lease drilling requirements or usable as necessary to meet the performance bond obligations of the lease and Section 13 of this chapter.
- (iii) Notwithstanding subsection (b) above, the Board may extend the term of an existing undeveloped oil and gas lease for a period not to exceed five (5) years in one-year increments, for rig unavailability. These extensions shall only be granted where the lessee has filed with the Office of State Lands and Investments written correspondence dated within the year of the extension with all known financially, environmentally and operationally suitable drilling contractors operating in the Rocky Mountain Region showing the unavailability of drilling rigs through those contractors. Such correspondence must be filed on an annual basis along with an application for an extension of the lease term.
(c) The Director may approve oil and gas lease suspensions of operations, where suspensions are authorized by lease terms, appear to be in the best interest of orderly development of the leases, and can serve to prevent premature lease abandonment.
060-18 Wyo. Code R. § 18-8