Garza Company obtained a lease with a three-year primary term on August 1, 2006.

a. Drilling operations were commenced on June 1, 2007, and continued until October 15, 2007, when the well was determined to be dry.

1) Would the first delay rental payment be required?

2) How many more delay rentals would be necessary to hold the lease without further drilling?

b. Drilling operations were started on May 1, 2009, and the well was completed on October 12, 2009, as a producer.

1) Did the lease terminate on August 1, 2009? Explain.

2) How many years will the lease continue (assuming production in commercial quantities)?