N.M. Code R. § 19.2.3.13 – Operations Before Discovery

A. Leases will require the lessee, within twelve (12) months from date of lease, unless extension be granted, to begin actual drilling upon the leased lands with machinery and equipment suitable for taking and preserving a core and to prosecute such drilling with reasonable diligence to a prescribed depth or to a depth as may be necessary to penetrate the formations containing the minerals for which the lease has been issued.
B. Upon completion of the first (1st) test bore, it will be required that an additional test bore shall be drilled each year thereafter until the number of bores completed shall equal the number of sections of land contained in the lease. Should fractions of sections be involved, a minor fraction of a section shall be disregarded and a major fraction shall be treated as a full section.
C. Leases shall provide, however, that where the deposits of the minerals are so situated that prospecting work may effectually be carried on by shafts, tunnels, open cuts or in any manner other than by drilling testbores, such prospecting work may be accepted in lieu of drilling.
D. In cases where there has been discovery of minerals in commercial quantities on the lands, or any production of any such minerals on such state land on a commercial basis has begun, any lease may provide for a specified minimum annual production of such minerals in lieu of the requirements of this rule.
[12/31/1999; 19.2.3.13 NMAC - Rn, 19 NMAC 3. SLO 3.13, 9/30/2002]