LEGAL GUIDE
Written by attorney Timothy Paul Lester | Dec 17, 2012

Common Oil, Gas & Mineral Lease Riders in Texas (Part 3 of 4)

Common Oil, Gas & Mineral Riders in Texas

(Part 3 of 4)

With suggested strikeouts.

Combination Pugh and Rental Clause

In the event a portion or portions of the land herein leased is pooled or unitized with other land so as to form a pooled unit or units, operations on, completion of a well upon, or production from such unit or units will not maintain this lease in force as to the land not included in such unit or units. The lease may be maintained in force as to any land covered hereby and not included in such unit or units in any manner provided for herein; provided that if it be by rental payments, rentals shall be reduced in proportion to the number of acres covered hereby and included in such unit or units. If at or after the end of the primary term, this lease is being maintained as to a part of the lands by operations on, completion of a well upon, or production from a pooled unit or units embracing lands covered hereby which is not situated in such unit or units and as to which the lease is not being maintained by operations, completion of a well, or production, Lessee shall have the right to maintain the lease as to such land by rental payments exactly as if it were during the primary term, provided that this lease may not be so maintained in force by rental payments more than _____ years beyond the of the primary term.

Release Required

If at any time within 2 years after the expiration of the primary term the land covered by this lease is being held solely through production from an oil or gas pooled unit, then Lessee agrees as part of the consideration for this lease, to release all acreage covered by this lease and not included within such pooled unit.

or

It is understood and agreed between the parties hereto that upon termination of this lease, Lessee, its successors and/or assigns, shall record a Release in the Clerk of Court's records of Parish, Louisiana.

Royalty Payment/Interest Penalty

Lessee shall commence payment of any and all royalties on the production of oil and/or gas that are owed to Lessor within ninety (90) days after said royalties become due and payable and if Lessee does not commence making said payments within said 90 day period and continue such monthly payments thereafter, then and in that event, Lessee shall pay interest on said unpaid royalties at the rate of 10% per annum or the then highest rate allowed by law. As to each well drilled hereunder, royalty payments shall not become due and payable until Lessor shall have returned to Lessee a duly executed Division Order directing payment of such royalties.

Free Royalty (No Marketing or Transportation Costs)

In computing Lessor's royalty, Lessee shall not deduct the cost of treating, garnering, transporting, dehydrating, compressing, extracting, processing, manufacturing, marketing or any other cost, whether similar or dissimilar to those enumerated.

Option to Extend

This lease may be extended for an additional two (2) years from the expiration of the initial primary term by Lessee’s tender to Lessor (at Lessor’s address) an amount equal to $150.00 per net acre for all or any portion of the leased premises. Tender must be made within 30 days of the expiration date of the initial primary term.

Counterparts

This lease may be executed in one or more counterparts which upon combination shall be considered one instrument for the purpose of recording and shall be binding on all parties who sign, regardless of whether or not all parties sign.

Copy of Assignment

Notwithstanding anything to the contrary contained herein, it is understood and agreed between the parties hereto that in the event this Lease is assigned in whole or in part, Lessee agrees to furnish Lessor with a copy of said assignment within 30 days of the date thereof.

Consent of Assignment

All or part of this lease may not be assigned without Lessor’s written consent; however, such consent will not be unreasonably withheld.

Market Value Clarification

The term market value or market price as used in this lease shall be deemed to be the price which Lessee received under the terms of any, oil or gas sales contract negotiated as an arms length transaction between Lessee and purchaser, after the date thereof. Notwithstanding this or any other provision in this lease, if the price of oil or gas is regulated by law or any governmental agency, the market value for the purpose of computing royalty shall not be in excess of the price which such law or agency permits Lessee to receive and retain.

Spudding-In/Operations

Notwithstanding anything to the contrary contained herein, it is understood and agreed between the parties hereto that wherever the words "operations" or "commencing operations" are used herein, same shall mean actually spudding in for the drilling of a well.

In-Kind

Notwithstanding anything to the contrary contained herein, it is understood and agreed between the parties hereto that Lessor at his sole risk and expense shall have the right to take his share of royalty on gas in kind, provided that he furnish Lessee with written notice of his intentions at least sixty (60) days prior to effecting this provision.

Favored Nations

Should lessee, its successors or assigns, enter into an Oil, Gas and Mineral Lease affecting lands contiguous to the leased premises, or which form, with the lands leased hereunder, part of a block created for the exploration for and development of oil and gas, which provides for a greater royalty or a greater cash consideration per acre than that provided for herein, then, in mat event, Lessee shall immediately pay the difference in cash consideration to Lessor and this lease shall be deemed amended, without further act, to conform to the greater royalty of such lease. This provision shall be inapplicable to tracts of land within the exploration block that are less than 10 acres in size.

Payment of Royalty

Within ninety (90) days after the commencement of any production under this lease, Lessee shall commence the actual payment of the royalties herein provided. After the initial royalty payment hereunder, all payments for royalties to be made by Lessee to Lessor hereunder shall be by check delivered to Lessor monthly on or before the thirtieth (30th) day of the second month following the month during which the gas is produced. Any royalty payment not paid when due shall accrue interest at the rate of twelve percent (12%) per annum until paid.

Expanded Warranty

Anything in this lease contrary notwithstanding, the parties further agree that for all purposes of this Lease, the rights granted the Lessee are limited to those owned by Lessor, and Lessor makes no representation or warranty as to its title, or as to its ownership, of the rights or interest in the premises, either expressed or implied, not even as to the return of bonus money or the return of any other payments made to Lessor by Lessee, including, but not limited to, revenue overpayments.

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