§ 66-7-103 — Maximum term of oil and gas leases

(a) (1) Any lease of oil or natural gas rights or any other conveyance of any kind separating such rights from the freehold estate of land shall expire at the end of ten (10) years from the date executed, unless, at the end of such ten (10) years, natural gas or oil is being produced from such land for commercial purposes. If, at any time after the ten-year period, commercial production of oil or natural gas is terminated for a period of six (6) months, all such rights shall revert to the owner of the estate out of which the leasehold estate was carved. No assignment or agreement to waive this subsection (a) shall be valid or enforceable. (2) This subsection (a) shall not be construed to affect the validity or the expiration date of any lease or other instrument executed prior to March 16, 1939, nor shall it be construed to affect the validity or the expiration date of any lease, conveyance or other instrument insofar as it may convey underground natural gas storage rights, or otherwise separate such rights from the freehold estate, whenever executed. (b) (1) For a period of one (1) year after the ten-year period provided for in subsection (a) has expired, "production," as used in subsection (a), includes the actual production of minerals under any lease hereof or by the owner of any mineral interest, or when operations are being conducted by any owner of a lease or mineral interest for injection, withdrawal, storage, or disposal of water, gas, or other fluid substances, or when rentals or royalties are being paid by the owner of such leases for the purpose of delaying or enjoying the use of exercise of the rights thereunder or when the same is being carried out on any tract with which such leasehold interest may be unitized or pooled for production purposes. During the one-year period provided for in this subsection (b), any act by the owner of any leasehold or mineral interest pursuant to or authorized by the instrument creating such interest shall be effective to continue in force all rights granted by such instrument, notwithstanding subsection (a). (2) This subsection (b) applies to a drilling unit of no more than the number of acres provided for under the pooling clause of the lease and provided there is compliance with the rules of the Tennessee oil and gas board as set forth in paragraph 1040-02-04 of such rules (well spacing).

Legislative History

Acts 1939, ch. 89, §§ 1-3; C. Supp. 1950, § 7620.1 (Williams, § 7620.1); Acts 1963, ch. 69, § 1; 1978, ch. 945, §§1, 2; T.C.A. (orig. ed.), § 64-704.