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Simple English definitions for legal terms
covenant to protect against drainage
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A quick definition of covenant to protect against drainage:
A covenant to protect against drainage is a promise made in an oil-and-gas lease that the person leasing the property will take steps to prevent the loss of oil and gas from the producing reservoir. This is done by drilling additional wells to offset any drainage that may occur. The covenant only applies if a reasonably prudent operator would also drill the additional wells.
A more thorough explanation:
A covenant to protect against drainage is a promise made in an oil-and-gas lease that the lessee will take measures to prevent the loss of oil and gas from the producing reservoir due to drainage. This is done by drilling one or more offsetting wells.
For example, if a company leases land for oil and gas production and starts drilling a well, they have a responsibility to protect the oil and gas in the reservoir from being drained by other wells nearby. To fulfill this covenant, the company may need to drill additional wells to prevent the loss of oil and gas.
This covenant only applies if a reasonably prudent operator would drill the additional wells. This means that the lessee must act in a responsible and reasonable manner to protect the oil and gas reserves.
Overall, the covenant to protect against drainage is an important aspect of oil and gas leases as it ensures that the lessee takes necessary steps to prevent the loss of valuable resources.