Non-drilling Covenant

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Non-Drilling Covenant

 

 Occasionally the client cannot afford to permit drilling and exploration operations underneath the client’s property, but nevertheless desires to produce oil and gas from the client’s mineral estate.  Examples would include shopping malls, hospitals, residential subdivisions, factories, or any valuable surface use that could not tolerate or accommodate a drilling rig.  In those cases, oil companies will frequently agreement to include a non-development covenant in the lease.  An example of such a covenant is:

 

Lessee agrees that Lessee, its successors, assigns or those claiming under it, shall not enter upon or use the surface of the Property for any purpose whatsoever, and that any drilling or other operations to explore for, or remove, any oil, gas, or other minerals from the Property shall be accomplished by directional drilling from other land, entering the Property below the surface thereof, and/or that said oil, gas or other minerals may be drawn from the Property by draining through a well or wells located on the surface of other property, pursuant to and in accordance with pooling or spacing orders or regulations as may be allowed by applicable state laws.  Provided, however, that the rightful owner of the surface estate in the Property may waive this restriction as to the use of the surface estate in the Property by Lessee, its successors and assigns, by written waiver, duly executed and recorded in the records of the Probate Court of Dewitt County, Alabama.

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