(a) Forfeiture for failure to drill an offset well.
  (1) Duty. See §9.37 of this title, (relating to Offset Well Obligations & Compensatory Royalties) for a full discussion of the duty to drill offset wells.
  (2) Subject to forfeiture. A lease is subject to forfeiture if there is a failure or refusal to:
    (A) begin the drilling operation required in §9.37 within the proper time frame set out in that section; or
    (B) prosecute this activity as required and as is necessary to reasonably develop the state land and to protect it against drainage.
(b) Forfeiture for other breaches. Other circumstances under which a state oil and gas lease may be forfeited are determined by certain provisions in each lease or by the laws of the state.
(c) Procedure.
  (1) When sufficiently informed of facts which subject a lease to forfeiture, it shall be the commissioner's policy to mail notice that the lease is being considered for forfeiture to those then shown in GLO records as the current lessee of the lease; and allow the lessee 30 days in which to present evidence and convince the commissioner that the commissioner should not forfeit the lease. The commissioner may, however, forfeit a lease without this prior notice in circumstances where the commissioner deems such action necessary to protect the best interest of the state. Failure of the commissioner to send this prior notice, or failure of the appropriate parties to receive this prior notice, will not in any way affect the validity of the forfeiture itself. However, upon any forfeiture, the lessee may request a reinstatement of the lease as set out in subsection (d) of this section.
  (2) When sufficiently informed of facts which subject a lease to forfeiture, it is within the commissioner's discretion to forfeit that lease by endorsing the following on the mineral file:
    (A) words declaring the lease forfeited;
    (B) the commissioner's signature; and
    (C) the date these actions are taken.
  (3) Upon such endorsement, the lease and all rights and payments made thereunder shall be deemed forfeited.
  (4) Promptly after forfeiture, the GLO shall mail notice of this action to those then shown in the GLO records as the current lessees of the lease and, in the case of Relinquishment Act land, to the surface owners then shown in the GLO records.
(d) Reinstatement.
  (1) Within 30 days of forfeiture for failure to drill an offset well and upon satisfactory evidence of future compliance with the applicable laws, the commissioner has the discretion to reinstate the lease upon the terms required by law and upon any other terms the commissioner may prescribe.
  (2) For forfeitures due to other breaches, the commissioner has the discretion to reinstate the lease at any time before the rights of another intervene. Upon satisfactory evidence of the lessee's future compliance with the applicable laws, and with any other term the commissioner may prescribe, the lease may be reinstated.

Source Note: The provisions of this §9.95 adopted to be effective January 7, 1999, 24 TexReg 146