Legal Definitions - operations clause

An operations clause is a provision in an oil-and-gas lease that ensures the lease will remain valid as long as oil-and-gas development continues on the leased property. This clause is also known as a continuous-operations clause or a well-completion clause.

For example, if a company leases a piece of land for oil-and-gas exploration and production, the operations clause would state that the lease will not expire as long as the company continues to drill wells and extract oil and gas from the property. This clause protects the company's investment in the lease and encourages them to continue developing the property.

Another example would be if a landowner leases their property to an oil-and-gas company and includes an operations clause in the lease. If the company stops drilling or extracting oil and gas from the property, the lease would expire, and the landowner could lease the property to another company.

In summary, an operations clause is a crucial provision in an oil-and-gas lease that ensures the lease remains valid as long as oil-and-gas development continues on the leased property.