Chapter $1$ Upstream Oil and Gas Operations

$39$

Aggie Company obtained a lease on August $1,2018.$ The lease contract specifies a three$-$year primary term.

a$.$ Drilling operations began on June $1,2019,$ and continued until October $15,2019,$ when the well was determined to be dry.

Would the first delay rental payment be required?

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

b$.$ Assume drilling operations instead began on May $1,2021,$ and the well was completed on October $12,2021,$ as a producer.

Did the lease terminate on August $1,2021?$ Explain.

How many years will the lease continue, assuming production in commercial quantities?