I recieved a letter requesting a limited term lease assignment of oil and gas on my property. It is limited to depths below 2000 feet. I am new at this and not sure if it something I should agree and sign or not.
The letter states this assignment is for a limited term and shall remain in force until midnight of December 12,2012 and as long therafter as oil or gas, or either of them, is produced from said land owned by me. If no well is commenced by midnight of December 31, 2012 the acreage will revert back to me. Then it states the overriding royalty interest.
Temporary...as in as long as oil or gas are produced.....I guess you could call the possibility of producing oil and gas for the next 30 to 100 years temporary. Also you should define commence, is one or two men in a 4-wheel drive staking a site commencement ? Or does it take a caterpillar making a road, something substantial to qualify as commencement ? How long is the continuing operations clause, that they could use to hold the lease without actually drilling a well ? Another 6 months beyond 12-31-12, or did they slip a year, possibly two in that clause ? They also might know there is going to be a well. Lastly,are you going to make enough money out of the deal to compel the other party to act in accord with the agreement if they decide they don't want to ? I think this deal should be in the lap of an O&G attorney if you are really considering it.