Depth limits: which rock the lease covers
A lease can cover every depth under your land, or only certain depths or formations. A depth clause either limits the lease from the start or releases unused depths later, so that rock can be leased again.
What it does
Many printed forms cover all depths. Once one well produces from one formation, the whole lease, top to bottom, can be held. A depth clause changes that.
Two kinds are common. A depth limit in the granting clause leases only named depths from the start. A depth release, also called a horizontal Pugh clause, frees depths below the deepest producing formation at the end of the primary term, often measured as a stated distance below it.
Depths are described in feet from the surface, or tied to a named formation or to a log from a nearby well. A formation name is clear to the company but may mean little to you, so ask how it compares to feet.
What we mark on a review sheet
Normal
- All depths leased during the primary term, with a release of unused depths after it.
- A release measured from the deepest producing formation.
Missing
- Any depth release at all.
- How the depth is measured.
Ask about
- Depths described only by a formation name, with no log or footage.
- A release that keeps a large cushion of depth below the producing formation.
Questions to ask the company
- Will you release depths below the deepest producing formation at the end of the primary term?
- How is that depth measured, and can you state it in feet or tie it to a named well log?
- Will you record the depth release and send me a copy?
Common questions
What is a depth clause in an oil and gas lease?
A clause that limits which depths the lease covers, or that releases depths not producing at the end of the primary term.
Why do depth limits matter?
Without one, production from one formation can hold every depth under your land, including formations that could be leased again later.
Send it before you sign
Tell us what you got and what you want to know. We reply by email and tell you how to send the pages. A landman reads them and sends back a one-page review sheet.
Email hello@landman.review with what you got and your question, or call (307) 263-8515.