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Unformatted text preview: Typical Oil and Gas Lease will have: Granting Clause -grants the lessee the exclusive right to explore for oil and gas (can have statements such as “will not build tank battery on property, etc”. Description Clause -describes the property as per agreed upon survey. Consideration Clause -giving consideration turns an “agreement” into a legally enforceable contract. * Bonus payments * Annual rentals * Royalty Habendum Clause -this gives the term (time of duration) of the lease. * primary term * lease remains in effect as long as minerals are being produced Should address proper payment of rentals, meaning of drilling operations, and production in paying quantities. Rentals -after the first year, if drilling has not been started, a rental is charged to encourage development or release of the lease. Drilling operations - spudding of a well Production in paying quantities - production which gives some revenue above operating costs Shut in Royalty (Rental) - if a well capable of production, but oil and/or gas cannot be sold immediately, the lease...
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This note was uploaded on 04/07/2008 for the course ACCT 1001 taught by Professor A during the Spring '08 term at LSU.
- Spring '08