We are negotiating lease language in Weld County. I have read that we should try to add a depth severance clause. Can someone recommend a strong one that makes sense in Weld County and that is reasonable for us to ask from the potential Lessee?
Thank you,
Adding clauses without taking into account the balance of the document can create a Dr. Frankenstein lease form that begs for trouble later on.
When you talk about depth severance, are you talking about a release of deep rights after the primary term or severing the depth prior to leasing?
Best,
Buddy Cotten
release of deep rights after the primary term, I have read to ask for
The Lessee shall release all depths below the deepest producing perforation at the end of the primary term.
Does that make sense? Thank you
If I were an oil company, it would not make sense to me.
HOWEVER, you could draft a clause that would be acceptable to all parties, such as: "Ninety days (90) after the end of the primary term of this lease or Ninety days (90) after all continuous drilling has been completed as provided in paragraph XX hereof, then Lessee shall..."
Again, I caution that adding clauses without taking into account the balance of the document can create a Dr. Frankenstein lease form that begs for trouble later on.
Buddy CottenI agree about the patchwork documents, but most all leases should have a Pugh clause that releases both horizontal and vertical undeveloped land. I think your language is great for that purpose. As to depth, we use 100 feet below...
Another problem is using the term "100 feet below the deepest producing perforation."
A good oil company would reject that language.
Acceptable language would read "...release all depths and horizons lying greater than the stratigraphic equivalent of 100 feet below the depth of the deepest perforations that are current producing or capable of producing by conventional e-log analysis..." OR words to that effect - taking into account the stratigraphic equivalent.
Buddy Cotten