Xxxx Clauses and Vertical/Horizontal Severances Sample Clauses

Xxxx Clauses and Vertical/Horizontal Severances. Like other real property interests, mineral estates can be severed and divided by acreage and/or horizons. Many leases today contain provisions that will effectuate a severance of lands and/or depths if there is a lack of production after the expiration of the primary term. A “vertical severance” is defined as: “A conveyance of all, or some portion, of the minerals in a portion of a tract subject to unified ownership or lease, e.g., a conveyance of minerals or of the leasehold in the SE ¼ of a section of land subject to unified ownership or lease.”16 A “horizontal severance” is defined as: “A conveyance of all, or some portion, of the minerals above or below or between specified depths, or in a given stratum or horizon, e.g., a conveyance of the minerals in the Xxxxxxxxxxx formation, or a conveyance of all minerals at a depth greater (or less) than 4000 feet beneath the surface.”17 A Xxxx clause is a lease provision that provides that drilling operations on, or production from, a pooled unit, or specified portion of property producing, shall maintain the lease in force only as to lands included within such units or specified producing portions of property.18 A vertical Xxxx Clause (often referred to as simply a “Xxxx Clause”) is a severance of lands/acreage, and a Horizontal Xxxx Clause is a severance of zones, formations, horizons, strata, and/or depths. 16 Xxxxxxxx & Meyes, “Manual of Oil and Gas Terms,” p. (11th Edition 2000). 17 Xxxxxxxx & Meyes, “Manual of Oil and Gas Terms,” p. 500 (11th Edition 2000). 18 Xxxxxxxx & Meyes, “Manual of Oil and Gas Terms,” p. 885 (11th Edition 2000). Xxxx Clauses allow landowners the opportunity to have non-producing portions of their property released from a lease that is otherwise producing on specified portions of the property. This further allows landowners to then lease the released lands/depths to other oil and gas companies. In some areas of the state, it is not uncommon to have multiple energy production companies drilling on different acreage and different depths on a single tract of land due to the use of Xxxx Clauses, thus making Xxxx Clauses a “must have” for landowners attempting to maximize their benefits. There are a myriad of examples of Xxxx Clauses. Unfortunately, cases interpreting these clauses are scarce. But, those cases in existence generally result in a case-by-case analysis based upon the specific language at issue in any given Xxxx Clause. Below are examples of both a vertical and horizontal Xx...