Paid-Up Oil and Gas Mineral Lease, Warranty of Title, expenses, pooling

Oil and Gas Leasing Help
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I am in the process of negotiating a new lease with Matador for property in Lea, NM. I asked the landman to remove the Warranty of Title portion of the lease. He did cross it out in the body of the lease, but then added an Exhibit with a Warranty of Title stating, “Lessor agrees to defend title to the interest conveyed to Lessee against claims which are by, through , or under Lessor, and its predecessor in title, but not otherwise.” Also in the first paragraph of the lease writes, Lessor agrees to execute any supplemental instrument requested by Lessee for a more complete or accurate description of said land. Is this still passing the expense onto the owner?

In addition, where the lease discusses royalty payment, it states it will be calculated at the well head price or if not at the nearest field less a proportionate part of ad valorem taxes and production, severance, or other exercise taxes. This is just passing post production costs onto the lessor, correct? Would you not agree to this?

Lastly, there is a section on pooling. What is your input on authorizing pooling on your leased property.

Thank you for the help. I am trying to understand more with each lease and division order that I receive.

Polly Tabeling

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@pollytabeling if you will allow me to speak my mind…

I applaud you for wanting to learn, however, you’re asking technical and specific questions about a contract that will have ramifications long into the future. This public forum can and does provide some wonderful insights, but you’d do yourself a big favor by hiring a qualified professional to help you. You need someone who is on the hook to you, who has a fiduciary responsibility to help you and you alone in negotiating with a counterparty who “does this for a living”. Oil and gas leases are a complex animal.

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A few quick thoughts. The limited warranty should be a “by, through, and under, but no further” provision. The landman will know what you mean by this provision. I either strike the warranty or offer this option. You will need some help in developing an acceptable “no cost” royalty provision. You may want to try the NARO website for thoughts in this area. The pooling of the lease allows for more effective development by the inclusion of your property in a larger unit, so this is a positive for economic development.

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