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In order to improve our continuation process and to provide guidelines for lessees, we have developed lease continuation application forms. The forms request information that Encana considers pertinent in order to confirm continuation of leases beyond primary term. Encana may require additional information for this purpose as it may deem necessary.
While the use of these forms is not a requirement under current leases, our expectation is that the application forms will expedite the continuation process for lessees as well as Encana.
Leases issued by Encana are continued and administered on the basis of formations, not groups, as identified in generally accepted, industry-recognized publications. For example, the Belly River is a group consisting of the Oldman, Foremost and Basal Belly River formations; the Edmonton Group typically consists of the Scollard, Horseshoe Canyon and Bearpaw formations. Similarly, the Mannville Group includes the Colony, Sparky, Rex, Glauconite, Ellerslie, Dina and several other formations.
Depending on the form and specific terms of the lease, continuation may apply from top to base of the producing formation(s) only or to the base of the lowest producing formation. For example, an Encana lease at the end of its primary term that is producing from the Sparky formation, will only be continued in (or to the base of) the Sparky formation, not in (or to the base of) the Mannville Group.
Generally Encana leases may be continued beyond expiry of the primary term by one of two methods. Lessees should review the specific terms and conditions of their leases to determine which continuation application method is appropriate:
The lessee is conducting production operations. Newer form Encana leases issued since 2003 (e.g. ECA-2003 Parkland, ECOG-2007 Parkland, ECA-2008 S/S (a) Parkland, etc) require that the lessee is conducting drilling operations or production operations (as defined in the lease) in order for the lease to be continued beyond primary term. For these forms of lease, lessees should complete and submit a Lease Continuation Application - Production Operations (Word).
The lease is producing or capable of producing. Older type Encana leases (e.g. N.R., O&G, 551 forms, etc.) require either a producing well or a well capable of producing in order for the lease to be continued after expiry of the primary term. For these forms of lease, lessees should complete and submit a Lease Continuation Application - Producing / Capable (Word).
Drilling through expiry
These application forms are not designed for use when drilling operations are being conducted through expiry even though the applicable lease language may allow for drilling through expiry. If a lessee anticipates drilling a well through the expiry date, we would ask that you contact Encana immediately.