Arizona § 27-671 - Provisions of lease

§ 27-671. Provisions of lease

A. The leases shall provide for the payment by the lessee of a royalty of not less than twelve and one-half per cent of the gross value of the resource at the well head.

B. The leases shall provide for an annual rental of not less than one dollar per acre for each year that the lease is in effect.

C. The leases shall be for a primary term of ten years and as long thereafter as geothermal resources are procured and produced in paying quantities from the leased lands. The lease upon which drilling operations are being diligently prosecuted on the expiration date shall continue in effect for a period of two years and so long as geothermal resources are procured and produced in paying quantities from such lands.

D. The leases shall contain other terms and provisions, not inconsistent with the provisions of this article or other laws of this state, as in the opinion of the department are for the best interest of this state.

E. Not more than two thousand five hundred sixty acres of land shall be included in any one lease. The leased lands shall be in as compact a body as possible but may include noncontiguous land.

F. Each lease shall provide that any combination, understanding or agreement entered into by the lessee, written, verbal or otherwise, for the purpose of delaying discovery or development of geothermal resources is an illegal practice, and that upon legal determination of such practice shall constitute grounds for cancellation of the lease. Appropriate proceedings shall be instituted by the attorney general against the lessee in the county in which the land or any part of such land is located. The provisions of this section shall not apply to a unit plan or operation entered into under the provisions of this article or to any plan or operation authorized by any conservation law of this state.