11 AAC 83.105. "Paying quantities" defined

"Production in paying quantities," as used in 11 AAC 83.100 - 11 AAC 83.295 and 11 AAC 83.400 - 11 AAC 83.910, means production in such quantity as to enable the operator to realize a profit. For purposes of the habendum clause of a lease, that is, for the purpose of keeping the lease in force after the expiration of the primary term, "paying quantities" means production in quantities sufficient to yield a return in excess of operating costs, even though drilling and equipment costs may never be repaid and the undertaking considered as a whole may ultimately result in a loss.

History: Eff. 9/5/74, Register 51; am 6/28/81, Register 78

Authority: AS 38.05.020

AS 38.05.145 (a)

AS 38.05.180

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