Leases for the extraction and removal of oil and gas deposits may be made by the commission to the highest qualified bidder, or joint bidders, as provided in this chapter. Such a lease shall include all oil and gas deposits in the leased land and be for a term of 20 years and for so long thereafter as gas or oil is produced in paying quantities from the leased land, or lessee shall be diligently conducting production, drilling, deepening, repairing, redrilling or other necessary lease or well maintenance operations on the leased land. Any lease heretofore issued under this chapter for a term of 20 years, or any renewal or extension thereof, may at any time or times prior to its expiration be extended upon such terms and conditions and for such period of time as the commission deems for the best interests of the state or as the Legislature may provide; provided further, that upon the lesseeâs timely application therefor the commission may issue a new lease in exchange for any lease issued for a term of 20 years, or any renewal or extension thereof; such new lease shall be issued at the same royalty and upon the same terms and conditions as the lease for which it is exchanged, unless the commission and the lessee shall otherwise agree, except that the term of such exchange lease shall be for a term of five years and for so long thereafter as oil or gas is produced in paying quantities or lessee shall be conducting production, drilling, deepening, repairing, redrilling or other necessary lease or well maintenance operations on the leased land. When state lands, including tide and submerged lands, are offered for lease by the commission, the commission shall specify a sliding scale royalty on oil commencing at not less than 16 2 3 percent up to a maximum percentage specified in the invitation to bid to be paid on the average production of oil per well per day under such lease, and a royalty of not less than 16 2 3 percent as specified in the invitation to bid on dry gas, natural gasoline, and other products extracted and saved from the gas produced under such lease, except gas used for lease use or reinjection into the leased lands. Such royalties shall be paid in kind or as a percentage of the current market price at the well of, and of any premium or bonus paid on, the production removed or sold from the leased land, subject to an annual rental payable in advance of not less than one dollar ($1) for each acre of land subject to the lease at the rental date. Unless the commission decides to reject all bids pursuant to Section 6836, the lease of the parcel or tract which is the subject of the bid shall be awarded to the qualified bidder who undertakes to pay the highest cash bonus in addition to satisfying all other provisions of the lease. As alternatives to the procedures set forth in the preceding paragraph, the commission, if it so provides in the invitation to bid, may: (1) specify a sliding scale royalty on oil commencing at 16 2 3 percent up to a maximum percentage specified in the invitation to bid, to be paid on the average production of oil per well per day under such lease, and a royalty of not less than 16 2 3 percent as specified in the invitation to bid on dry gas, natural gasoline, and other products extracted and saved from the gas produced under such lease, except gas used for lease use or reinjection into the leased lands, and award the lease of the parcel or tract which is the subject of the bid to the qualified bidder who bids the highest factor to be applied to the scale of oil royalties specified in the offer to bid, in addition to satisfying all other provisions of the lease, unless the commission decides to reject all bids pursuant to Section 6836; or (2) specify that bidding shall be on the basis of a flat rate of royalty and award the lease of the parcel or tract which is the subject of the bid to the qualified bidder who undertakes to pay the highest flat rate of royalty, but not less than 16 2 3 perce
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