Silly Question, but can someone tell me where there's a space for the lessee to sign on the lease agreement - to make it a legal binding contract?
Not a silly question. The oil company accepts the lease by their actions.
The oil and gas lease is not a lease at all, but a conveyance of the minerals in the nature of a determinable fee and the lessor is entitled to a royalty and the possibility of reverter. In 99% of property transfers, the grantee/lessee/vendee does not execute the conveyance.
I received one lease from a potential lessee that had a place on the lease for the lessee to execute the lease, so some leaseas have them. If a lessee told you it is never done, I wouldn't believe them.
Dear Bob,
You are correct on that point. When I negotiate big leases, I have the Lessor and Lessee initial every page without a signature and have the lease (and exhibit if one were included) executed by both parties.
I had a problem with a lessee about 3 years ago, and they said "we were not aware of that clause" and I replied that "You initialed the two pages the clause was on."
My lease shows "OIL AND GAS LEASE" right at the very top ...
Dear Kaye,
I can understand your confusion. What Mr. Williams (above, an oil and gas attorney) will tell you is that titles or captions really do not mean anything. It is what the document says and more importantly what the courts have ruled that it has said. The old saying is that if it walks like a duck and quacks like a duck and looks like a duck, it is a duck, even though someone else says that it is a chicken. So go to the meaning of the document rather than the title. If there were no title on the document at all, it has the same effect.
The law of oil and gas is unique and specific to the state where the property is located. For example, in Texas, when you reserve minerals, you are reserving the minerals in place (ownership state) and in non-ownership states, like Louisiana and Oklahoma, for example, you do not own the oil and gas until it is produced and reduced to possession. The non-ownership states say that a mineral interest is an easement to come and remove, in the nature of a profit a prende. I consider the distinction academic, but is the basis of oil and gas law for those states. In all states that I am familiar, and oil and gas lease is a conveyance of minerals as I set forth above.
Trust Mr. Williams on this one.
Thank you all for the information!!
Concur with Buddy and Mr. Williams. It's academic, but it is the law and its interpretation that governs. Buddy is also correct with the title of an instrument. You have to look at the "four corners," or the body of the document in its entirety, in order to determine what it does and does not do.
Kaye,
Buddy and Mr. Wiliams are right on everything. But, I would add one more thing to the lease. At the bottom of the page you sign (notary page) make refers to the exhibit that is part of the lease. These pages needed to be filed at the county clerk office with the lease. Also, it is a very go idea to have the leasing company sign the exhibit page also.
In Oklahoma, you don't pay on the mineral, except for state income tax if a well produces.
In TX, if a well produces, it raises your property tax.
Virginia,
I always thought that the exhibit/addendum was not filed and was generally part of the oil/gas company's non-disclosure agreement. That way, only the "boiler plate" lease is filed, but not the addendum that includes the lease amounts and terms.
What do people know about this?
Nonetheless, your other signature points are well advised regardless of what is filed with the county clerk.
Wilson
Virginia Pflum said:
Kaye,
Buddy and Mr. Wiliams are right on everything. But, I would add one more thing to the lease. At the bottom of the page you sign (notary page) make refers to the exhibit that is part of the lease. These pages needed to be filed at the county clerk office with the lease. Also, it is a very go idea to have the leasing company sign the exhibit page also.
In Oklahoma, you don't pay on the mineral, except for state income tax if a well produces.
In TX, if a well produces, it raises your property tax.