Held By Production

AAA

DEFINITION of 'Held By Production'

A provision in an oil or natural gas property lease that allows the lessee, generally an energy company, to continue drilling activities on the property as long as it is producing a minimum paying amount of oil or gas. The "held by production" provision thereby extends the lessee's right to operate the property beyond the initial lease term. This provision is also a feature of mineral property leases.

INVESTOPEDIA EXPLAINS 'Held By Production'

The "held by production" provision enables energy companies to avoid renegotiating leases upon expiry of the initial term. This results in considerable savings to them, particularly in geographical areas that have become "hot" due to prolific output from oil and gas wells. With property prices in such areas generally on an upward trend, leaseholders would demand significantly higher prices to renegotiate leases.

RELATED TERMS
  1. Intangible Drilling Costs - IDC

    Costs to develop an oil or gas well for the elements that are ...
  2. Spud

    In the oil and gas industry, the process of beginning to drill ...
  3. Working Interests

    Refers to a form of investment in oil and gas drilling operations ...
  4. Wildcat Drilling

    The process of drilling for oil or natural gas in an unproven ...
  5. Lease

    A legal document outlining the terms under which one party agrees ...
  6. 1979 energy crisis

    The 1979 energy crisis in the U.S. was an event of widespread ...
Related Articles
  1. Investing Basics

    Oil: A Big Investment With Big Tax Breaks

    Oil and gas investments can provide unmatched deduction potential for accredited investors.
  2. Active Trading

    Oil And Gas Industry Primer

    Before jumping into this hot sector, learn how these companies make their money.
  3. Home & Auto

    8 Lease Clauses You Need To Know

    If you're renting an apartment this year, beware of signing contracts with these tricky clauses.
  4. Forex Education

    A Primer On Offshore Drilling

    Learn the important ratios and terms that you'll need to know to get involved in this trading sector.
  5. Active Trading

    Unearth Profits In Oil Exploration And Production

    Drill down into financial statements to tap into the right companies and let returns flow.
  6. Markets

    Saudi Arabia: King Abdullah's Death and Oil's Fall

    The recent passing of King Abdullah of Saudi Arabia has brought the kingdom's future—and its stance on oil production—into question.
  7. Economics

    Oil Prices' Impact On Oil Transport Sector

    Short-term changes in oil prices and in the volume of oil produced have a marginal impact on the oil transportation industry in Canada.
  8. Economics

    How does fracking affect oil prices?

    Read about the short- and long-term impacts of hydraulic fracturing, also known as fracking, on global oil markets and oil prices.
  9. Options & Futures

    How does fracking affect natural gas prices?

    Take a deeper look at the impact of hydraulic fracturing on the price for natural gas, and why fracking may eventually price itself out.
  10. Economics

    How has fracking helped the U.S. to decrease dependence on foreign oil?

    Learn about the drilling technique referred to as fracking, and discover how this technology has significantly reduced U.S. dependence on foreign oil.

You May Also Like

Hot Definitions
  1. Multiplier Effect

    The expansion of a country's money supply that results from banks being able to lend. The size of the multiplier effect depends ...
  2. Command Economy

    A system where the government, rather than the free market, determines what goods should be produced, how much should be ...
  3. Prospectus

    A formal legal document, which is required by and filed with the Securities and Exchange Commission, that provides details ...
  4. Treasury Bond - T-Bond

    A marketable, fixed-interest U.S. government debt security with a maturity of more than 10 years. Treasury bonds make interest ...
  5. Weight Of Ice, Snow Or Sleet Insurance

    Financial protection against damage caused to property by winter weather specifically, damage caused if a roof caves in because ...
  6. Weather Insurance

    A type of protection against a financial loss that may be incurred because of rain, snow, storms, wind, fog, undesirable ...
Trading Center