Need some assistance on a lease

#1

We are looking at a new lease and wanting to clarify if these changes are okay:

1)They want a 2 year Shut in Clause

2)They do not offer Most Favorite Nations clause

They do except:

1)They do accept depth clause of 100’ below

  1. No deduction clause

  2. 1/5 royalty - we have 44.625 mineral acres - should it be1/4 royalty due to the amount of acres?

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#2

Be very careful about the wording of the shut in clause.

They timing is fine, but it should say “cumulative”, not “consecutive”

You don’t need a Most Favorite Nations clause. Almost impossible to prove.

Be very careful about the wording of the depth clause. It needs to say “producing”, not “penetrated” or “drilled”.

It is up to them as to what they offer as a royalty. 1/5th is normal. 1/4th depends upon the area. You also need a commencement of drilling clause, a very tight no post production costs clause, no warranty of title, no top lease, no horrible Force Majuere clause, no option to renew.

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#3

Thank You for the info, it has helped alot and I sent them a email to make sure they put everything in the contract correctly. You have been a great help. Thanks, John

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#4

has anyone heard of Whitesail Energy. they have contacted me about a lease in canadian county

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