Legal Definitions - paying quantities

Paying quantities refers to the amount of mineral production from a single well that is sufficient to justify a reasonably prudent operator to continue producing from that well. In the oil and gas industry, this term is often used to determine whether a lease will remain in effect.

The habendum clause is a provision in an instrument, such as a deed or will, that defines the extent of the interest being granted and any conditions affecting the grant. In the context of oil and gas leases, the habendum clause defines how long the interest granted to the lessee will extend.

For example, a modern oil and gas lease may provide for a primary term, during which the lessee has no obligation to develop the premises, and a secondary term, which extends for "so long thereafter as oil and gas is produced." However, most jurisdictions require production of paying quantities to keep the lease in effect.

Overall, the habendum clause is an important part of an instrument that helps to clarify the extent of the interest being granted and any conditions affecting the grant.