§ 38-09-18 — Terms of lease - Unit operation

All leases for the purposes as hereinbefore provided shall be made by the state of North
Dakota and all agencies and departments and political subdivisions thereof for not less than
twenty-five cents per acre [.40 hectare] per year for deferred drilling and shall be made with a
royalty reservation of not less than one-eighth of all oil and gas produced from said land as long
as oil and gas may be produced from said land. The term one-eighth as used herein must be
construed to mean one-eighth of such interest as may be owned by the lessor. All leases
hereunder must be made for a period of not less than five years and must continue in effect
under the terms thereof as long as oil or gas may be produced thereon in commercial quantities.
The state of North Dakota and all agencies, departments, and political subdivisions thereof, are
specifically authorized to enter into agreements for the consolidation of land covered by leases
on lands under the jurisdiction of such bodies with other adjoining or neighboring lands for the
purpose of joint development and operation of the entire consolidated premises as a unit. In
such a case, such agreement must provide that the lessor shall share in the royalty on oil and
gas produced from a consolidated tract in the proportion that the area of the land covered by
such lease bears to the total area of such consolidated tract, or upon such other royalty sharing
basis as may appear equitable to the governing body controlling or administering such lands;
and operations or production on such consolidated tract shall have the same effect as
operations or production under the terms of each such lease included therein.