Drilling-Delay Rental Clause Law & Legal Definition


The drilling-delay rental clause is a provision in an oil-and-gas lease. This provision provides the lessee the right to maintain the lease from period to period during the primary term by way of paying delay rentals instead of starting drilling operations. Since the drilling-delay rental clauses obviate any implied covenant to drill a test well on the premises, lessees use this clause. This is also accepted by the lessors since they provide for periodic income from the lease. The purpose of the lease drilling-delay rental clause is to ensure that the lessee has no obligation to drill during the primary term by negating any implied obligation to test the premises.