If you’ve looked into your oil and gas lease, you’ve probably encountered the term “held by production,” or HBP. It’s one of the most important concepts in oil and gas leasing — and it directly affects both your rights as a mineral owner and the value of your interest.

The Basics: Primary Term vs. Secondary Term

Most oil and gas leases have a primary term — a fixed period (commonly 3 to 5 years) during which the operator must establish production or the lease expires. Once production in paying quantities is established, the lease enters its secondary term and remains in effect “for so long thereafter as oil or gas is produced.” That’s what it means to be held by production: as long as the well keeps producing, the lease stays alive, potentially for decades.

Why HBP Status Matters to Mineral Owners

You can’t re-lease HBP acreage. If your minerals are held by production under an old lease, you can’t sign a new lease with better terms — even if your lease was signed decades ago at a 1/8 royalty when modern leases in your area command 1/4.

Production gaps can matter. If production ceases for longer than the lease’s savings clauses allow (cessation-of-production, shut-in royalty, or continuous drilling provisions), the lease may terminate — freeing your minerals for a new lease. Determining whether a lease is actually still HBP after a production gap often requires careful review of production records and the specific savings clause language.

Depth severances complicate the picture. Some leases only remain HBP as to the producing formations or depths, with deeper or shallower rights terminating after the primary term. This means part of your minerals could be open for leasing even while another part remains held.

How HBP Status Affects Value

Producing HBP minerals are valued primarily on their royalty income stream. Minerals held under an old, low-royalty lease may be worth less than comparable open acreage — but interests with a plausible lease-termination argument or open depths can carry meaningful upside that a knowledgeable buyer will recognize.

Questions About Your Lease Status?

Husky Land Services regularly analyzes HBP determinations, production histories, and lease savings clauses as part of our title work across Texas, New Mexico, and Oklahoma. If you’d like to know where your lease stands — or get a cash offer for your minerals — contact us today.