Oil and gas lease clauses
Here are some sample oil and gas lease clauses that I found to be helpful as a mineral owner:
This lease is made by Lessor without warranty of title, either express or implied, except as to conveyance or encumbrances by, through, or under Lessor, but not otherwise.
It is agreed between the Lessor and Lessee that, notwithstanding any language herein to the contrary, all oil, gas or other proceeds accruing to the Lessor under this lease or by state law shall be without deduction, for the cost of producing; gathering, storing, separating, treating, dehydrating, compressing, processing, transporting, and marketing the oil, gas and other products produced hereunder to transform the product into marketable form; however, Lessor’s share of any such costs which result in enhancing the value of the marketable oil, gas or other products to receive a better price may be deducted from Lessor’s share of production so long as they are based on Lessee’s actual cost of such enhancements and the Lessor’s pro rata portion of such cost is less than the amount of the enhanced value of the product. In no event shall Lessor receive a price that is less than the price received by Lessee.
In the event this lease is extended by commercial production beyond its primary term, then on such date this lease shall terminate as to all rights 100 feet below the lowest producing perforation. If Lessee is in the process of drilling or completing a well at the end of the primary term of this lease, this clause shall become effective upon conclusion of such operations.
Notwithstanding anything to the contrary in this lease, all portions of this lease not included within the geographic boundaries of the largest unit created by the Oklahoma Corporation Commission or upon which drilling operations have not commenced, shall be released one (1) years after the expiration of the primary term of this lease. Should the unit as established by the Corporation Commission be changed after the expiration of the primary term, all portions of this lease not included in the newly prescribed Corporation Commission unit will be released at the end of said one (1) year period.
The right to maintain this lease in force by paying shut-in royalties as set out in the shut-in paragraph of this lease is a recurring right which may be exercised by the Lessee from time to time, but shall not exceed any consecutive period of two (2) years commencing from the end of the primary term of this lease. Shut-in royalty shall be $12 per net acre.
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