1. (a) General provisions applicable to producing oil and/or gas on state leases.

   1. (1) The GLO will treat a well as non-producing if no RRC production reports are filed for that well or if reports showing zero production are filed with the RRC for that well.
   2. (2) All wells producing liquids must be produced through an oil and gas separator of ample capacity and in good working order.
   3. (3) Lessee must obtain written permission from GLO staff before commingling state production with private production or before commingling state oil and/or gas from two separate leases, separate reservoirs or multiple stratigraphic or lenticular accumulations. Send commingling requests to the address found in §9.32(c)(3)(A) of this title, (relating to General Responsibilities of State Lessees).
2. (b) Effect of production during or after the primary term. If production in paying quantities is established during the primary term, lessee shall be exempt from paying further delay rentals so long as such production continues through the primary term. Thereafter, subject to other lease requirements, terms and conditions, a lease shall remain in effect so long as oil and/or gas is being produced in paying quantities from the lease.

3. (c) Cessation of production.

   1. (1) If production ceases within 60 days of a lease anniversary date during the primary term, the lease is maintained until the next anniversary date without payment of delay rentals. If production ceases more than 60 days before a lease anniversary date during the primary term, a delay rental must be timely paid on or before such anniversary date to maintain the lease by delay rentals.
   2. (2) If production ceases during the last year of the primary term or within the 60 days immediately preceding that last year, the lease will be maintained to the end of the primary term. To maintain a lease after such cessation of production, lessee may conduct drilling or reworking operations in compliance with §9.34(d) of this title, (relating to Drilling and Reworking Operations), treating the last day of the primary term as the date of cessation of production under such paragraph.
   3. (3) If production ceases after the primary term has expired, Lessee may maintain its lease by conducting drilling or reworking operations under §9.34(d) or as otherwise authorized by the lease
4. (d) No ratification or revivor. If a lease ceases to produce and is not otherwise maintained in force and effect, no action by the state or an owner of the soil on Relinquishment Act property, may ratify, re-grant or revive the terminated lease or may estop the state from asserting lease termination.

Source Note:The provisions of this §9.35 adopted to be effective January 7, 1999, 24 TexReg 146.