Section 19-13-11 - Leases; duration. - New Mexico Statutes

19-13-11. Leases; duration.

A.     Any lease entered into pursuant to the Geothermal Resources Act [19-13-1 to 19-13-11, 19-13-12 to 19-13-28 NMSA 1978] shall be for a primary term of five years and so long thereafter as geothermal resources are being produced or utilized or are capable of being produced or utilized in commercial quantities from such lands or from lands unitized therewith, subject to continued payment of annual rentals as provided in Section 19-13-7 NMSA 1978. If the lessee fails to produce or utilize geothermal resources or to discover geothermal resources capable of being produced or utilized in commercial quantities from the lands, or from lands unitized therewith during the initial five-year term, the lessee may continue the lease in full force and effect as to the portion held by him for a secondary term of five years and so long thereafter as geothermal resources are being produced or utilized or are capable of being produced or utilized in commercial quantities from such lands or from lands unitized therewith by continued payment each year, in advance, of annual rentals at the rate of five dollars ($5.00) per acre, annually. Provided, that if for any reason beyond the control of the lessee production or utilization of geothermal resources in commercial quantities shall cease or if the capability to so produce is temporarily lost after the secondary term has expired, the producing lessee may, with the written permission of the commissioner of public lands, continue such lease as to the acreage held by him in effect from year to year for an additional period not to exceed three years by continued payment of annual rentals as provided in the lease at the rate provided in the secondary term of the lease.   

B.     If commercial production or capability of commercial production be had during the primary term and thereafter ceases before the primary term would have expired, the lease shall be deemed to be a "nonproducing or incapable of producing" lease from that date and the lessee shall have the unexpired portion of the primary term and any subsequent terms within which to resume such production or capability of production. If commercial production or capability of commercial production is had during the primary term and ceases during the secondary term, the lease shall be deemed to be a "nonproducing or incapable of producing lease" from that date and, upon payment of rentals as provided in Subsection A of this section, the lessee shall have the unexpired portion of the secondary term within which to resume such production or capability of production. When such production or capability of production is resumed, the term of the lease shall continue so long thereafter as geothermal resources are being produced or utilized or are capable of being produced or utilized in commercial quantities from the leased land or from land unitized therewith. In such cases, the rental rate for the lease or the portion thereof shall be the rental rate provided in the term or portion of the term in which such production or capability of production is resumed.