I’ve been contacted by Ovintiv seeking to trade its undeveloped leasehold - lease signed in 2015 - to Flywheel. We have an addendum requiring the lessor to sign the lessee’s consent to assign this lease. I’m pretty new to this and haven’t come across this issue yet - I assume this is common however are there any specifics I should look out for before consenting to this lease trade? Thanks & appreciate any input!
First, if the lease is dated 2015, then it would be past the primary term and and continuous drilling period. Is the lease producing? Did any acreage or depths expire under a Pugh clause? Or by undeveloped do you mean that there is unit and these will be fill-in wells? Second, be careful that the consent language is limited to the transaction and that you are not being asked to ratify that the lease has not expired.
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If there is no production that is covered by your lease, then it sounds like the lease has expired, and they are trying to get you to keep it going with the old terms. A lot has changed since 2015 as far as what wording you would want in a new lease. You might also be able to get a higher royalty, and you would be entitled to a new bonus payment. I would recommend you consult a good oil and gas attorney. There are a couple of them at Bass Law in El Reno.
Without seeing the clause, its hard to determine 100%. But, a safe assumption (90%) is that you didnt sign the intial OGL and inherited it and whomever signed the original lease added a clause to the OGL to be notified when it is assigned for whatever reason. You can attach the OGL in a post for better advice