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7 Cards in this Set
- Front
- Back
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What are D/O's?
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statements executed by all the interest holders in a particular well stipulating their fractional interests for distribution of royalty payments.
How payments are divided between RI and MI |
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Key points with D/O's
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binding until revoked
Underpaid owner may revoke the DO to correct the error for future payments. (but cant recover cause binding til revoked. D/O's cannot change or contradict underlying lease (if contradicts, DO is invalid.)...but it CAN CLARIFY methods of paying royalty... D/O's sometimes provide lessor's royalty is to be paid on the basis of the "Market price (or value) at the well" where the gas is sold or used off the premises....so value determined by CURRENT PRICE of similar gas sold in area, not by prices in lessee's gas purchase K. |
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1991 DO Act
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binding until revoked, However, IT IS NOT BINDING to extent it changes or contradicts a elase....so you could recover past underpayments cause point is it was never valid in first place....NOTICE CONTRADICTS LEASE
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IMPLIED COVENANTS...what are the 3?
What is the standard of performance |
Implied covenant to market O&G production
Implied covenant to protect against drainage Implied covenant for reasonable development Performance is as a reasonbly prudent opera |
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What is implied cov to market
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Requires lessee to mkt production w/in reasonable period of time at best available price.
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What is Implied covenant to protect against drainage
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Requires lessee to act as reasonbly prudent operator to protect the leased premises against drainage.
This is basically exception to general rule that lessee has no duty to drill in primary term...cause he must protect the property here. Lessor must show: 1. substantial drainage 2. driling will be profitable 3. Damages..royalties would've received. |
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What is Cov for Reasonable Development
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ONCE O&G DISCOVERED, obligation to further develpo the premises is reognized.
Lessor must prove there's a reasonable expectation of profitability of additional wells adn the lessee has been imprudent in failing to act. |
