The oil lease terms and gas lease terms cited on this page are commonly used in lease negotiations and agreements.
The theory that minerals such as oil and gas are fully owned in place before they are extracted and reduced to possession. Title to oil and gas may be lost by legitimate drainage and by the rule of capture.
A private company in the business of preparing abstracts of title and performing related services.
Acreage owned in the vicinity of a test being drilled by another party and contributed to the driller of the well in return for information obtained by drilling.
A method of asserting and gaining title to property against other claimants, including the record owner. The claim through adverse possession must include certain acts, as required by statute, over an uninterrupted interval of time. It is also open, notorious, and hostile.
A clause in any legal instrument that allows either party to the contract to assign all or part of his/her interest to others.
An estimate of costs prepared by a lease operator and sent to non-operators for their approval before work begins. This estimate is normally used in connection with well drilling operations.
A cash payment by the lessee for the extraction of an oil and gas lease by the mineral owner, usually given in dollars per acre. Sometimes an oil payment or royalty is reserved as a bonus by the lessor.
In an oil and gas lease, this clause fixes the duration of the lessee's interest in both a primary and secondary term. It is also refereed to as a term clause.
A contract in which two or more co-owners of the operating rights in a tract of land join together to share costs of exploration and possible development.
A business undertaking in which the parties in the agreement share control, profit, losses, and liability.
A legal document executed between a landholder who is the lessor and a company or individual who is the lessee that grants the right to exploit the premises for minerals. It is also the land or area where the production wells, stock tanks, separators, and other production equipment are located.
An agreement between companies for the purchase by one company of a block of the other companies' leases.
Owner of the rights and interests in a mineral estate, such as oil and gas, where interests in a landed estate have been severed.
The portion of oil and gas production money paid after all operating and development costs are paid.
A well drilled on a tract of land next to another owner's tract on which there is a producing well.
A non-operating interest in oil and gas for one or more leases. It provides to the owner a fractional share of the oil and gas produced that are free of the costs of production. It terminates when a specified dollar amount or volume of production has occurred.
An oil and gas lease that is paid up through the primary term. It is part of the when the lease is first acquired.
A cost free percentage of the working interest that ends when a specified amount of money or number of barrels has been reached.
The part of the oil, gas, and minerals or their cash value paid by the lessee to the lessor based on a percentage of the gross production from the property free and clear of all costs except taxes.
The clause that established the percentage of production paid to the lessor.