Royalties on oil, gas, and other substances produced and saved hereunder shall be paid by Lessee to Lessor as follows: (a) For oil and other liquid hydrocarbon separated at Lessee’s separator facilities, the royalty shall be twenty tree percent (23%) of such production, to be delivered at Lessee’s option to Lessor at the wellhead or to Lessor’s credit at the oil purchaser’s transportation facilities, provided that Lessee shall have the continuing right to purchase such production at the wellhead market price then prevailing in the same field (or if there is no such price then prevailing in the same field, then in the nearest field in which there is such a prevailing price) for production of similar grade and gravity; (b) for gas (including casinghead gas) and all other substances covered hereby, the royalty shall be twenty three percent (23%) of the proceeds realized by Lessee from the sale thereof, less a proportionate part od ad valorem taxes and production, severance, or other excise taxes and the costs incurred by Lessee in delivering, processing or otherwise marketing such gas or other substances, provide tat Lessee shall have the continuing right to purchase such production at the prevailing wellhead market price paid for production of similar quality in the same field (or if there is no such price then prevailing in the same field, then in the nearest field in which there is such a prevailing price) pursuant to comparable purchase contracts entered into on the same or nearest preceding date as the date on which Lessee commences its purchase hereunder; and (c) if at the end of the primary term or any time thereafter one or more wells on the leased premises or lands pooled therewith are capable of producing oil or gas or other substances covered hereby in paying quantities, but such well or wells are either shut-in or production therefrom is not being sold by Lessee, such well or wells shall nevertheless be deemed to be producing in paying quantities for the purpose of maintaining this lease. If for a period of 90 consecutive days such well or wells are shut-in or production therefrom is not sold by Lessee, then shall pay shut-in royalty of one dollar per acre then covered by this lease, such payment to be made to Lessor or to Lessor’s credit in the depository designated below, on or before the end of said 90-day period and thereafter on or before each anniversary of the end of said 90-day period while the well or wells are shut-in or production therefrom is not sold by Lessee; provided that if this lease is otherwise being maintained by operations, or if production is being sold by Lessee from another well or wells on the leased premises or lands pooled therewith, no shut-in royalty shall be due until the end of the 90-day period next following cessation of such operations or production. Lessee’s failure to properly pay shut-in royalty shall render Lessee liable for the amount due, but shall not operate to terminate this lease. All comments or references will be greatly appreciated. Thank you so much & God bless, S
if their willing to go 23% then 25% shouldn't be a problem.... all the rest looks like standard contract language (which generally favors leasee since they are the one that wrote it). For example, $1 an acre for a shut-in clause is a joke...that means they will pay you $104 per year and they control when your oil/gas is sold and they control the lease (because you have a "producable well") and there is no termination date as long as shut-in royalty is paid.... Yatta Yatta Yatta. Sir, you need an oil & gas attorney to help you with your lease. Otherwise, you are setting yourself up to get torched by a leasehound. If i remember correctly from your other post you have 26 acres and most folks around you have already leased. Your leverage is almost gone or certainly decreasing fast. You may spend $1500 on an attorney (just a guestimate) but in the long run it will pay you back 100 fold if they drill a well and hit paydirt. Please don't take my words as harsh, they are just direct cause oil/gas leases will hurt you more than help you if you get it wrong.
JMH
I agree 100% with JMH. A good oil and gas attorney can help you understand
the terms of this lease. For one thing, the language of the lease allows them
to make alot of deductions from royalty check. You need to know these
BEFORE you sign. No lease is written in stone. Everything is subject to negotiation.
Do your best now to have less regrets later. Find a good oil and gas attorney.
Good luck to you.
SF
JMH & SF, THANKS a $ill for your advise. I am working on finding a lawyer to tie this leasing situation but how can I find a experienced oil & gas lawyer that I can trust? What credentials should I check before rely on one? What sure I expect from the lawyer in this case? Should I have lawyer to work on mineral is one thing & surface use is another or work on both matters? I gained alot of info from people like you on this site. Thanks again for your comments & time. Best regards, S.
JMH said:
if their willing to go 23% then 25% shouldn't be a problem.... all the rest looks like standard contract language (which generally favors leasee since they are the one that wrote it). For example, $1 an acre for a shut-in clause is a joke...that means they will pay you $104 per year and they control when your oil/gas is sold and they control the lease (because you have a "producable well") and there is no termination date as long as shut-in royalty is paid.... Yatta Yatta Yatta. Sir, you need an oil & gas attorney to help you with your lease. Otherwise, you are setting yourself up to get torched by a leasehound. If i remember correctly from your other post you have 26 acres and most folks around you have already leased. Your leverage is almost gone or certainly decreasing fast. You may spend $1500 on an attorney (just a guestimate) but in the long run it will pay you back 100 fold if they drill a well and hit paydirt. Please don't take my words as harsh, they are just direct cause oil/gas leases will hurt you more than help you if you get it wrong.
JMH
Friends, Family, Folks you Trust, other Landowners in same County. You talk to a few landowners and you'll get a feel for "who not to use" for sure LOL Get a few names and come home and "Google" them....you would be surprised at the info on the net. A good one, in my opinion, will already have his/her "own" Lease Addendum. This Addendum re-writes the standard lease to make it more fair/favorable to you and more applicable to the oil/gas operations in the area your land is located. A good lease in Texas is not the same as a good lease in CO, SD, PA, OH, etc. Basic principals are the same but payments, damages, RI, vary by location.
I like what Tfarming said finding leases Municipalities use. I have used them for examples of contractual wording, to learn how provisions work, and see what the market may bear. However, municipalities and governmental entities have leverage with the oil companies that you and i don't have and never will. Vice-versa the Oil Companies want to be favored by the governing entities of communities they are drilling in. Chesapeake and others have gotten away with a lot of "stuff" in the Barnett Shale because they improved the tax base in Fort Worth and the surrounding areas. Again use Google and read, read, read :)
Good luck, you are on the right track, now just educate your self and dive in! If you have been around attorneys very much you will know who is good and who pushes paper. Find you one that has some moxie!
sam sugg said:
JMH & SF, THANKS a $ill for your advise. I am working on finding a lawyer to tie this leasing situation but how can I find a experienced oil & gas lawyer that I can trust? What credentials should I check before rely on one? What sure I expect from the lawyer in this case? Should I have lawyer to work on mineral is one thing & surface use is another or work on both matters? I gained alot of info from people like you on this site. Thanks again for your comments & time. Best regards, S.
JMH said:
if their willing to go 23% then 25% shouldn't be a problem.... all the rest looks like standard contract language (which generally favors leasee since they are the one that wrote it). For example, $1 an acre for a shut-in clause is a joke...that means they will pay you $104 per year and they control when your oil/gas is sold and they control the lease (because you have a "producable well") and there is no termination date as long as shut-in royalty is paid.... Yatta Yatta Yatta. Sir, you need an oil & gas attorney to help you with your lease. Otherwise, you are setting yourself up to get torched by a leasehound. If i remember correctly from your other post you have 26 acres and most folks around you have already leased. Your leverage is almost gone or certainly decreasing fast. You may spend $1500 on an attorney (just a guestimate) but in the long run it will pay you back 100 fold if they drill a well and hit paydirt. Please don't take my words as harsh, they are just direct cause oil/gas leases will hurt you more than help you if you get it wrong.
JMH