17-9-3 - Bonus consideration, delay drilling rentals, term, and royalties; rights of lessees.
§ 17-9-3. Bonus consideration, delay drilling rentals, term, and royalties; rights of lessees.
No lease authorized by this chapter shall be made:
(a) For an original bonus consideration of less than one dollar ($1.00) per acre,
(b) For a delay drilling rental of less than one dollar ($1.00) per acre per annum,
(c) For a primary term of more than six years and as long thereafter as oil, gas or other mineral is being produced from the leased premises or as long thereafter as lessee shall conduct drilling, mining, producing or other operations and during the production of oil, gas, sulphur or other mineral resulting therefrom,
(d) For royalties of less than
1. On oil, one-eighth (1/8) of that produced and saved from the leased premises;
2. On gas, including casinghead gas or other gaseous substances, produced from the leased premises and sold or used off the premises or in the manufacture of gasoline or other products therefrom, the market value at the well of one-eighth (1/8) of the amount realized from such sale;
3. On sulphur mined and marketed, the royalty shall be fifty cents (50) per long ton;
4. On all other minerals mined and marketed one-tenth (1/10) either in kind or value at the well or mine at lessee's election.
Lessee shall have free use of oil, gas, coal, and water from the leased premises, except water from lessor's wells, for all operations thereunder, and the royalty on oil, gas and coal shall be computed after deducting any so used. Where the interest to be leased by a county or municipality is less than the full and undivided fee simple estate, then the bonus consideration, delay drilling rental and royalties required by this section may be reduced in the proportion which the interest of the county or municipality bears to the whole and undivided fee. Any such oil, gas and mineral lease may provide that where the production from a well producing gas or gas with well distillate or condensate only, is not sold or used, lessee may pay as royalty an annual amount equal to the amount of the drilling delay rental, and if such payment is made, it will be considered that such well is producing for every purpose thereunder.
Sources: Codes, 1942, § 2892-01; Laws, 1946, ch. 185, § 2.