On January 1, 2018, Ark Oil Company signed a lease contract for a lease in Texas. A four-year primary term was specified in the lease contract.

a. On what date is the first delay rental payment due?

b. What is the maximum number of delay rental payments that may be made?

c. By what date must drilling commence in order to keep the lease from terminating?

d. Assume Ark Oil begins drilling a well on January 2, 2020.

REQUIRED:

1) Would the first delay rental be necessary to keep the lease from terminating?

2) If the well is still in process 14 months later, would the second delay rental be necessary?

3) If instead the well was completed and production begun by October 3, 2020, would the second delay rental be necessary?

4) If production ceased by December 25, 2020, would the third delay rental payment be necessary?