Opinion ID: 1773920
Heading Depth: 2
Heading Rank: 2

Heading: Oil and Gas Lease Provisions

Text: A Texas mineral lease grants a fee simple determinable to the lessee. See Texas Co. v. Davis, 113 Tex. 321, 254 S.W. 304, 309 (1923). Consequently, the lessee's mineral estate may continue indefinitely, as long as the lessee uses the land for its intended purpose. Davis, 254 S.W. at 306. However, a mineral estate will automatically terminate if the event upon which it is limited occurs. Gulf Oil Corp. v. Reid, 161 Tex. 51, 337 S.W.2d 267, 269 (1960). A lease's habendum clause defines the mineral estate's duration. Gulf Oil Corp. v. Southland Royalty Co., 496 S.W.2d 547, 552 (Tex.1973). For instance, a typical habendum clause states that the lease lasts for a relatively short fixed term of years (primary term) and then as long thereafter as oil, gas or other mineral is produced (secondary term). See, e.g., Reid, 337 S.W.2d at 269 n. 1; see also 1 Smith & Weaver, Texas Law of Oil & Gas § 4.3 (1996). In Texas, such a habendum clause requires actual production in paying quantities. Reid, 337 S.W.2d at 269-70; Garcia v. King, 139 Tex. 578, 164 S.W.2d 509, 512 (1942). Thus, a typical Texas lease that lasts as long as oil or gas is produced automatically terminates if actual production permanently ceases during the secondary term. See Amoco Prod. Co. v. Braslau, 561 S.W.2d 805, 808 (Tex.1978). Although the habendum clause generally controls the mineral estate's duration, other clauses may extend the habendum clause's term. Southland Royalty, 496 S.W.2d at 552. When a lease terminates is always a question of resolving the intention of the parties from the entire instrument. Southland Royalty, 496 S.W.2d at 552.