Chapter 7 Lease Negotiation

Top  Previous  Next

 This chapter addresses and discusses the following aspects of negotiating the terms of an oil and gas lease for you or your client:


         •        The location of the property


         •        The timing of the leasing transaction


         •        The size of the property


         •        The different values of bonus and royalty


         •        Negotiating the oil royalty clause


         •        Negotiating the gas royalty clause


         •        Lessor's Preferential Right to Purchase Oil and Gas


         •        After Payout Royalty Escalation


         •        After Payout Option to Escalate Royalty or Convert to Working Interest


         •        Gas Balancing


         •        No Double Deductions


         •        Negotiating the other mineral clause


         •        Lessor's Lien


         •        Negotiating the leasing clause


         •        Goals for the primary term


         •        Pooling concerns  


         •        The shut-in royalty clause


         •        The delay rental clause


         •        Minimum Drilling Commitment


         •        Offset Well Covenant


         •        Free use of water and gas


         •        Restrictions on assignment


         •        The default clause


         •        The warranty clause


         •        The force majeure clause


         •        The restoration clause


         •        Tax Responsibilities


         •        Tax credits or incentives


         •        Indemnity and Environmental Indemnity


         •        Data sharing


         •        Non-drilling Covenant  


         •        Other Restrictions of the Surface User Easement


         •        Surface Damages Clauses


         •        Pugh Clause


         •        Abandoned Well Property


         •        Clearance of Title Upon Lease Termination




Copyright 2011 by Edward G, Hawkins. All rights reserved.