I was just wondering if anybody had any information on what the term "top lease" means. I have a general idea but would greatly appreciate more specific input.
As written in the 5th edition Handbook of Oil Industry Terms & Phrases: "A lease given by the landowner while his property is still under lease by another person or company. Such as lease becomes effective if and when the existing lease expires or is terminated. The top lease is dated to go into effect the minute the primary term of the existing lease runs out. This is not pleasing to the leaseholder, but it often happens. The person taking the lease and the one giving the lease (landowner) rationalize that the former lessee had three to five years to commence a well but failed to do so; therefore, the land is up for grabs."
Hope that helps.