Oklahoma lease form - Force Majeure Clause demanding everything but the kitchen sink (and sink may be there in small print), really digging their heels in. Apparently unsophicated mineral owners have been signing leases with this clause.
Has anyone run into this and found a solution?
What is it demanding? FM Clauses are pretty common and typically allow certain accommodations when unforeseen circumstances (acts of god) arise. Such as a tornado plucking a rig from a drill site. In that case the lessee would have an additional amount of time to get a new rig on site and continue drilling.
I take out the whole FM clause if I can. If I can’t, then I take out anything pertaining to poor planning on their part (lack of materials, lack of pipeline, lack of staff, etc.) and leave the true Acts of God in. Sometimes it works, and sometimes it doesn’t.
They are digging their heels in demanding for example: drilling rig, marketability, supplies, equipment and possible easement issues. Obviously not acceptable.
In the past I’ve always limited my FM Clause. Apparently this is one of the new ways to rip off mineral owners and unfortunately there are people that will sign leases with this type language without argument .
FM like that-Not acceptable. I would wait for pooling or find another lessee.
From a risk standpoint, I can see where they’re coming from, but I would strike those as well. Those are more like acts of poor planning.
Ann, Is this what you are seeing?
“This lease shall not be subject to termination, forfeiture of rights, or damages for breach due to failure to comply with obligations or conditions if compliance is prevented by force majeure . “ Force majeure ” shall include acts of God, federal, state, or local law, or order, rule or regulation of governmental authority, war, armed hostilities, strike, civil disturbance, flood, fire, explosion, lack of market, scarcity of or inability to obtain or to use drilling rigs, equipment or material, inability to obtain (on a reasonable basis) easements, permits or other authority necessary for any operation, or any other cause beyond the reasonable control or Lessee…”
Look at the commencement of operations if it is the same company: “Well Operations shall be deemed to be commenced when the first material is placed on the leased premises or on lands pooled or unitized therewith or when the first work other than surveying or staking the location is done thereon which is necessary for such Operations.”
I’ve had this language presented to me a couple of times recently and I told the lessors to just walk away.
I would never sign with this FM, Martha & Rick. Yes, Rick, that’s the wording.
bhiggins, I believe it’s designed to extend the lease without having to pay for it. The old drive a stake, throw a couple 2x6 boards on the ground and hold the minerals ad infinitum.
This one is Calyx from Tulsa and is in McIntosh County and I understand they’re using the same lease form in Ofuskee County.
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