Section 19-8-23 - Covenants to market and develop. - New Mexico Statutes

19-8-23. Covenants to market and develop.

All leases issued under the provisions of this act [19-8-14 to 19-8-18, 19-8-21 to 19-8-33 NMSA 1978] shall contain provisions requiring the lessees to market the mineral or minerals within a reasonable time after production is had. In addition, said leases shall contain provisions requiring the lessees to use reasonable diligence, after  production is had, in prospecting for and developing all commercial deposits of mineral or minerals.   

The commissioner may  cancel leases for violation of such marketing and developing provisions only after notice and in the manner as provided in Section 12 [19-8-27 NMSA 1978] of this act, and in all cases of controversy arising out of such cancellation the lessee shall have  the burden of proof by a preponderance of the evidence that further development is not warranted, or is unreasonable, or that  a market is not available, as the case may be.