Chapter 7 Lease Negotiation

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 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.