§ 31:124 — Production in paying quantities required; definition

Louisiana § 31:124

• Jurisdiction: Louisiana
• Title 31: Motor Vehicles and Traffic Regulation

Text

When a mineral lease is being maintained by production of oil or gas, the production must be in paying quantities. It is considered to be in paying quantities when production allocable to the total original right of the lessee to share in production under the lease is sufficient to induce a reasonably prudent operator to continue production in an effort to secure a return on his investment or to minimize any loss.
As to all other minerals, it is sufficient if a reasonably prudent operator would continue production considering the particular circumstances in the light of the nature and customs of the industry involved. In appropriate cases, such as the mining of lignite, a court may consider the total amount of production allocable to the mining plan or project of which a particular lease is a part, rather than merely the amount of production from that lease.

Legislative History

Acts 1974, No. 50, §124, eff. Jan. 1, 1975. Amended by Acts 1976, No. 129, §1.