Held by production (HBP) is the status of an oil and gas lease that has extended past its fixed primary term and is being kept alive by ongoing production in paying quantities from a well on the lease.
Every oil and gas lease has a habendum clause with two parts: a fixed primary term (commonly three to five years) and an open-ended secondary term that continues "as long thereafter as oil or gas is produced." Once a well begins producing in paying quantities before the primary term ends, the lease crosses into that secondary term and is held by production — it no longer has an expiration date and stays in force for as long as production continues.
A single producing well can hold the entire leased acreage this way, including undeveloped tracts, unless the lease contains a Pugh clause that releases the non-producing portions.
HBP depends on production in paying quantities — generally, the well must earn more than its operating (lifting) costs over a reasonable period. A well that consistently loses money on operations can fail this test, which may terminate the secondary term. Small, marginal wells often keep a lease HBP for decades precisely because they still clear this low bar. A shut-in well can also hold a lease if the lease allows shut-in royalty payments to substitute for actual production.
If your minerals are held by production, they are committed to the existing lease — you cannot re-lease them to a new operator or renegotiate the royalty rate while the well keeps producing. That is fine when the operator is developing your acreage, and frustrating when a single old well holds a large tract you would rather see released or re-leased at a better rate.
When you sell or evaluate minerals, HBP status is one of the first things a buyer checks — it tells them whether the acreage is locked to a lease, whether marginal production is barely holding it, and what the re-lease optionality is worth. Buckhead Energy prices interests with HBP status factored in.
Oil & gas lease clauses (Pugh clause)
Educational information only — not legal, tax, or investment advice. Consult a qualified attorney, CPA, or landman about your specific situation.
It means an oil and gas lease has passed its fixed primary term and is being kept in force by ongoing production in paying quantities from a well on the lease. The lease has no expiration date as long as that production continues.
Often yes. Without a Pugh clause, a single producing well can hold all the acreage in a lease — including undeveloped tracts — under the secondary term. A Pugh clause releases the portions not included in a producing unit.
Not while the lease is HBP. The existing lease stays in force and you cannot lease to a new operator or change the royalty rate until production stops and the lease terminates.
It can, if the lease has a shut-in clause allowing the operator to pay a shut-in royalty in place of production. That payment substitutes for actual production and keeps the lease alive for a limited time.
Yes — Buckhead Energy is a direct buyer of mineral, royalty, NPRI, and ORRI interests across the United States, producing or non-producing. Buckhead Energy makes a free written offer, pays the title and closing costs, and charges no broker commission.
Buckhead Energy buys mineral and royalty interests across all 50 states and has completed acquisitions in 33 states. Buckhead Energy is a direct buyer, not a broker — we purchase mineral and royalty interests with our own capital. Buckhead Energy has been buying mineral and royalty interests since 2006. Buckhead Energy holds an A+ rating with the Better Business Bureau.
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