Reading...
Play button
Play button
Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
156 Cards in this Set
- Front
- Back
|
Three types of land descriptions
|
1 – Metes & Bounds
2 - Rectangular Survey System 3 - Course and Distance |
|
|
Drawbacks of Metes & Bounds
|
1 - irregular tracks
2 - complex descriptions 3 – monuments aren’t permanent 4 – gaps and overlaps |
|
|
Describe Rectangular Survey System
|
Most common type of legal description
Adopted in 1805, designed by Thomas Jefferson Consists of “Range” lines (run North and south) & Township lines (run East and West) All survey lines are based on a “central point” - Ex: Indian Meridian, OK. |
|
|
Description of a “Township”
|
Each consists of 36 different sq. mile sections
Each section is 640 acres (except correction ones) |
|
|
Define and identify “Correction Sections”
|
Sections that correct for the curvature of the earth
Each township has 11 correction sections They run along the North and West edges of the T Numbered: 1-6, 7,18,19,30 and 31 |
|
|
Describe the 3 meandering stream terms associated with irregular sections
|
1. Riparian – one who owns the bank of a river
2. “Accretion” – gradual accumulation Of land by natural causes 3. “Avulsion” – sudden and perceptible loss or addition to land by the action of water |
|
|
Interpreting Legal Descriptions:
No separator describes _ “of the” describe _ “and” or “and the” describes _ “,” describes _ |
One track
One track Two tracks Two tracks |
|
|
Define “Fee Simple Absolute”
|
Highest power of ownership; unlimited rights and unlimited duration
|
|
|
Define “Fee Simple”
|
Subject to termination upon the entry of the person holding the absolute
|
|
|
Define “Fee Simple Determinable”
|
Estate terminates automatically upon the “happening”
|
|
|
Define “Life Estate” and types of tenants
|
Life tenant may have full rights to the estate during life.
Remainder tenant has the right following the death of the life tenant. |
|
|
4 methods of transference of real property
|
1 – Instrument of Conveyance
(ex: Quitclaim deed, Warranty Deed, ect) 2 – Inheritance (ex: Will) 3 – Judicial Action (ex: Foreclosure, tax sale, ect) 4 – Adverse Possession |
|
|
Define the conditions of “Adverse Possession”
|
1 – Open
2 – Notorious 3 – Visible 4 – Continuous …possession of the property for statutory period |
|
|
List the Instruments of Conveyance
|
Quitclaim Deed
Warranty Deed |
|
|
Define a “Quitclaim” Deed
|
Conveys all the Grantor’s rights* without any convenants of titles
**does not guarantee that grantor has ownership |
|
|
Define “Warranty” Deed
|
Conveys rights described and includes covenants of title
|
|
|
List of the Covenants of Title
|
1 – Title/Ownership
2 – No Encumbrances 3 – Peaceful Possession |
|
|
Severance of the mineral estate from the surface estate by instrument of conveyance
|
1 – Warranty Deed - “reserving the minerals”
2 – Mineral Deed – conveys only the minerals • Mineral estate becomes the “dominant estate”, surface becomes “subservient” |
|
|
Define terms of “dominant estate”
|
Owner can use as much of the surface estate as necessary to develop the mineral estate; must pay damages
|
|
|
Define terms of “subservient estate”
|
Cannot keep dominant estate from accessing minerals, or using necessary amounts of surface
|
|
|
Define the terms of Co-Tenants
|
- One who acquires an undivided interest becomes a co-tenant with the owner or owners
- No single owner has exclusive or separate rights, all have common ownership - majority consent NOT needed to explore |
|
|
How to create a lesser interest in the mineral estate?
|
1 – limiting the exception and reservation in a Warranty Deed
2 – limiting the grant in a mineral deed |
|
|
Types of lesser interests in the mineral estate
|
1 – Fractional interest: creates co-tenancy of minerals
2 – Horizontal severance: splits minerals by formation, footage, strat equivalent 3 – Term Interest: interest of less than perpetual duration |
|
|
Describe the three types of “horizontal severance”
|
“an assignment of an interest above, below or between the specified depths or in a give stratum or horizon”
- By horizon or formation - By footage (depth) - By stratigraphic equivalent |
|
|
Describe “term interest” in minerals
|
“less than perpetual duration”
- Fixed Term (20 yrs etc.) - Determinable Term (as long as o/g produced) |
|
|
List/Describe the rights of the mineral estate
|
1 – right to sell and convey all or any part of minerals (create fractional interests)
2 – right to explore and develop 3 – right to execute a lease for E&P 4 – Right to “bonuses” –up-front payment 5 - Right to delay rentals 6 – Right to royalty (non-cost bearing share) |
|
|
Define “rule of capture”
|
Each mineral owner is entitle to extract all the oil and gas from beneath his land no matter where it migrates from, so long as he stays within his vertical boundaries. Once produced it becomes personal property
|
|
|
Limitations to Rule of Capture
|
1 – Protection of Correlative Rights:
2 – Law of conservation (well spacing, density, location, prod allowable, unitization) 3 - Storage of Extracted Hydrocarbons 4 – Subsurface Trespass |
|
|
Describe “Correlative Rights”
|
1 – Cannot waste extracted substances
2 – Cannot spoil the common source |
|
|
Describe examples of conservation laws
|
“purpose to avoid the economics and physical waste of oil and gas”
Examples: 1 – Well spacing: area to be produced 2 – Well Density: number of wells 3 - Well location: how close to boundary of other wells 4 – well production allowable: how much can be produced 5 – well unitization for enhanced recovery |
|
|
Describe the “Oil and Gas Lease Transaction”
|
Where the mineral owner (Lessor) transfers their right to explore, develop and produce oil and gas to a company (Lessee) for a defined period and mutual benefit of both parties
|
|
|
Lessor’s Objectives
|
1 – find someone to explore, produce & market
2 – obtain a cash bonus regardless of drilling 3 – obtain royalty from production |
|
|
Lessee’s Objectives
|
1 – obtain right to drill, produce and market without obligation to develop
2 – to maintain those rights as long as is profitable |
|
|
Describe the types of interests
|
1 – Royalty Interest (Lessor) – free of all production costs
2 – Working Interest (Lessee) – bears cost of getting production to facilities 3 – Overriding Royalty Interest – carved out of working interest 4 – Other Interests – ex: production payment |
|
|
“Lessor . . .does hereby grant, demise, lease, and let unto said Lessee…”
|
Granting Clause
|
|
|
List the Rights and uses conveyed in the “Granting Clause”
|
1 – right to explore, produce and sell
2 – Ingress and Egress 3 – Necessary and reasonable use of the surface 4 – limitations on the type and qty. of the Lessor’s interest” |
|
|
Substances Covered in “Granting Clause”
|
1 – Oil and Gas
2 – Other Minerals 3 – water for operations |
|
|
“it is nevertheless the intention of the lessor to include within this lease. . .”
|
“it is nevertheless the intention of the lessor to include within this lease. . .”
|
|
|
“not only such interests in the leased premises as the lessor presently owns therein but also such additional interests . . .”
|
“After-Acquired Title Clause”
|
|
|
Habendum Clause
|
How long will lease remain in effect?
1 – Primary Term – lessee has the right but not the obligation to drill 2 –Secondary Term – lessee may produce; “and so long thereafter as oil or gas … is produced” |
|
|
“Actual Production Rule”
|
Actual (physical) extraction and marketing of oil or gas in paying quantities
|
|
|
“Discovery Rule”
|
“capable of producing” – discovery of oil or gas in paying quantities
|
|
|
“Oil Production and Gas Discovery Rule”
|
Discovery of gas in paying quantities OR the extraction and marketing of oil in paying quantities
|
|
|
The effect f express language…
|
… trumps general rules
|
|
|
Operating Revenues
|
=Gross sales – royalties & taxes
|
|
|
Operating Expenses
|
Costs associated with lifting oil from the ground AFTER the well has been drilled
|
|
|
Two types of Drilling-Delay Rental Clauses
|
“OR” – nonpayment results in delay rental
“UNLESS” – nonpayment results in termination |
|
|
What 4 things constitute “commencement” of drilling operations
|
1 – operations have been conducted on the land
2 – good faith preparation for drilling of a well 3 – operation have been continued in good faith with due diligence 4 – intention of completing well |
|
|
List the “Savings Clauses”
|
List the “Savings Clauses”
|
|
|
“Continuous Drilling Clause” (Savings Clause)
|
1 - Saves the lease in the case that the habendum clause is not satisfied
2 - Covers drilling that has not finished by expiration of primary term 3 – assures lessee right to complete a well |
|
|
“Dry Hole Clause” (Savings Clause)
|
(During Primary Term) If a hole is dry, either start drilling another hole within 12 months , resume rental payments, or terminate.
|
|
|
Pooling & Unitization Clause
|
Bringing together, voluntary or otherwise, leased and/or unleased tracks or interests for the purpose of drilling a well for the joint benefit of all owners in the pool
|
|
|
“Implied Covenants”
|
Unwritten promises made a part of the oil and gas lease, which impose additional burdens on the Lessee for the protection of the Lessor
*express covenant will override an implied covenant |
|
|
Historically implied Covenants of the O&G Lease
|
1 – to drill an initial exploratory well
2 – reasonably develop the leased premises 3 – to explore further 4 – to protect lease premises from drainage 5 – to market the product 6 – conduct operations with reasonable care and due diligence |
|
|
3 support agreements
|
1 – dry-hole agreement
2 – bottom-hole agreement 3 – acreage contribution agreement |
|
|
“Farmout Agreement”
|
Used where the lessee (farmor) is unable or unwilling to drill on the lease but the lessee is willing to assign an interest in the lease to another (farmee) who will assume drilling obligations
|
|
|
Benefits to the Farmor
|
1 – well provides geological and engineering data for offset drilling
2 – well satisfies certain clauses in the underlying lease 3 – well satisfies implied covenants 4 – well extends the life of the lease 5 – share of production without cost of drilling, completing or equipping a well |
|
|
Benefits to Farmee
|
1 – right to drill on an otherwise unavailable leasehold
2 – right to drill without incurring initial leasehold costs |
|
|
“Operating Agreement”
|
A contract between working interest owners for the joint development of a designated area (“Contract Area”)
*NOT a conveyance, IT IS A CONTRACT |
|
|
Prior to entering a JOA, parties must agree on:
|
1 – The operator
2 – the contract area 3 – the target formation or depth of initial well 4 – percentage of Op and Non-Op interests |
|
|
JOA – Article II:
|
Exhibit A – description of lands, restrictions, parties, ownership percentages, etc.
Exhibit C – accounting procedure “COPAS” Exhibit E – gas balancing agreement |
|
|
"COPAS"
|
Council of Petroleum Accountant Societies
|
|
|
JOA – Article III: Interests of the Parties
|
Share of costs and production (lowest common royalty burden)
Subsequently created interests |
|
|
JOA – Article IV: Loss or Failure of Title
|
“Individual loss” – party whose lease failed or was lost, bears the loss
“Joint loss” – all parties bear proportionately the loss of the lease “Dry hole Risk” – party who contributes to a defective title incurs the dry hole risk Loss by non-payment – 90 days to fix it |
|
|
Operator shall conduct operations (Article V-A):
|
1 – as a reasonable prudent operator
2 – in a good and workman like manner 3 – with due diligence and dispatch 4 – in accordance with good oilfield practice 5 – in compliance with applicable law and regulation |
|
|
Basis of removal of operator for “good cause”
(Article V-B1): |
1 – gross negligence
2 – willful misconduct 3 – material breach of or inability to meet the standards of operations in article V-A |
|
|
Resignation of Operator
|
May resign at any time by giving written notice to non-Ops
Deemed to have resigned w/o any action by non-op if: 1- Terminates legal existence 2- No longer owns interest in area 3- No longer capable of serving as operator 4- Becomes insolvent, bankrupt, etc. |
|
|
Removal of Operator
|
*different than resignation
1 – for “good cause” (Article V-B1) 2 – vote by non-op’s owning majority interest after excluding |
|
|
"Production Imbalance"
|
A selling owner takes gas at a rate disproportionate to its percentage share resulting in an imbalance in the production form well
- "Overproduced Owner" - more than % share - "Underproduced Owner" - less than % share |
|
|
Three alternatives to bringing an underproduced owner into balance
|
1 - balancing in kind *preferred
2 - interim cash balancing 3 - cash balancing at depletion |
|
|
"Balancing in Kind"
|
Underproduced owner takes a % share of the overproduced owner's gas until the production is made-up]
*industry preference |
|
|
"Interim cash balancing"
|
Underproduced owner receives a cash payment from the overproduced owner to make up the production imbalance
|
|
|
Three types of price used for cash balancing
|
1 - fair market value
2 - actual priced received by overproducer 3 - weighted average price |
|
|
"Cash Balancing upon Depletion"
|
Underproduced owner receives cash payment from the overproduced owner to make-up
|
|
|
Resource Conservation and Recovery Act (RCRA)
|
Purposes:
1 - prevent the release of hazardous waste to the environment 2 - provide a waste management scheme for the handling and disposal of solid hazardous wastes |
|
|
List the ways a substance becomes hazardous waste
|
1 - by definition
2 - hazardous waste list 3 - by characteristics: flammable, toxic, corrosive, ignitable 4 - by the "mixture" or "derived from" rules |
|
|
RCRA "E&P Exemption"
|
Drilling fluids, produced waters, and other associated wastes with the exploration, development and production of crude oil or geothermal energy
*exempt from handling guidelines but are still defined as hazardous |
|
|
Federal Water Pollution Control Act
|
to prevent and control discharges of oil and hazardous substances into the waters of the United States
|
|
|
Safe Drinking Water Act
|
Protect groundwater from underground injection and maintain quality standards for drinking water
|
|
|
Clean Air Act
|
Regulate hazardous emissions into the air of the U.S.
|
|
|
Emergency Planning and Community Right-to-Know Act
|
To provide public information about hazardous material on site and to require emergency plans for the release of certain extremely hazardous chemicals
|
|
|
Comprehensive Environmental Response, Compensation Liability Act (CERCLA)
|
Purpose - to require the cleanup or remediation of sites where there has been a release of hazardous substances or there exists a threatened release of hazardous substances
*current and prior owners and operators are jointly and severally liable for clean-up costs **allows gov't to chase deep pockets |
|
|
"Petroleum Exclusion" from CERCLA
|
Petroleum including crude oil or any fraction thereof and natural gas are excluded from the term "hazardous substance"
*different from RCRA |
|
|
Common Law Liability for Pollution, types of claims
|
1 - Nuisance
2 - Negligence 3 - constructive fraud (ongoing event) 4 - Unjust enrichment 5 - breach of contract |
|
|
Define "Nuisance"
|
Unlawfully doing an act or omitting to perform a duty which:
a. Annoys, injures, or endangers the comfort, repose or health b. renders persons insecure in life or use of property |
|
|
Define "Negligence"
|
The failure to use such cares as a reasonably prudent and careful person would use under similar circumstances
|
|
|
Define "Constructive Fraud"
|
Negligence that is ongoing without notification
|
|
|
Define "Unjust Enrichment"
|
Amount of money saved by not spending to prevent an occurrence; victims entitled to funds
|
|
|
Defenses to Landowner's claims
|
1 - statute of limitations
2 - coming to the nuisance 3 - contributory negligence 4 - release and satisfaction 5 - causation |
|
|
"Coming to the nuisance"
|
Where nuisance is known about prior to the purchase, nullifying the nuisance
|
|
|
"Contributory Negligence"
|
Negligence to a pre-existing condition
|
|
|
"Release and Satisfaction"
|
After mitigation, landowner signs a release that absolves company from all future claims
|
|
|
"Causation"
|
There has to be a "causal link" to injury in order to justify claim
|
|
|
Types of injury to real property
|
1 - permanent
2 - Temporary Injury |
|
|
Define Temporary Injury Terms
|
When reasonable cost of remediation plus loss during time of injury does not exceed the diminution of the fair market value (FMV) of the property
|
|
|
Permanent Injury Terms
|
Permanent Injury Terms
|
|
|
Define "Punitive Damages"
|
(punishment) paid to landowner; idea is to deter future transgressions, NOT to reward land owner
|
|
|
Define "Injunction"
|
A request to stop action
|
|
|
"Abatement"
|
(typically deals w/ gov't regulation), a requirement to remediate effects
|
|
|
Attorney fees and costs are recovered by the...
|
The prevailing party
|
|
|
Environmental Property Assessments
|
Phase I - a superficial examination of the property and its historical uses
Phase II - a physically intrusive sampling and testing of the property which involves test holes, monitoring wells, soil borings, air samples, etc. |
|
|
"Indemnification"
|
Protects the "other" person against claim, if the transgression occurs during the predecessors time
|
|
|
Requirements for a valid instrument of conveyance
|
- Writing
- Words of grant - Description of property - Grantor and Grantee - Signature (proper execution) - Delivery and acceptance - Consideration (payment) |
|
|
"...excepting and reserving unto Grantor, his/her heirs, successors and assigns, all of the oil, gas and other minerals underlying or that may be produced from the (property)..."
|
Words of exception and reservation in the granting clause
|
|
|
"Minerals"
|
oil, gas, and other minerals in and under or that may be produced from the property. Not hard minerals.
|
|
|
Severance of the Mineral Estate from the Surface Estate by Instrument of Conveyance
|
- Warranty Deed - conveying the property but excepting and reserving the minerals
- Mineral Deed - conveying only the minerals |
|
|
"...all of the oil, gas and other minerals in the SW/4 of Section 26 for a period of 20 years from the date of this conveyance and for so long as oil, gas or other minerals are produced from the land in paying quantities..."
|
Term interest in the minerals (fixed and determinable)
|
|
|
Royalty
|
A non-production cost bearing share of the oil and/or gas production
|
|
|
Remedies available to "victim" of subsurface trespass
|
1 - dry hole trespass: damages based on loss of speculative value of minerals
2 - Producing well trespass: ejectment of trespasser and damages for recovery of well and previously paid proceeds |
|
|
Good faith trespasser
|
Trespasser recovers reasonable costs of drilling, completing, equipping and producing well
|
|
|
Bad faith trespasser
|
Trespasser does not recover any costs of drilling, completing, equipping, and producing well
|
|
|
"Notwithstanding any particular description, it is nevertheless the intention of lessor to include within this lease, and he does hereby lease, not only the land so described but also any and all other land owned or claimed by lessor in lands adjacent or contiguous to the lands specifically described."
|
Mother Hubbard Clause
|
|
|
"This lease covers not only such interests in the leased premises as the lessor presently owns therein but also such additional interest as he may acquire in the future by operation of the law or otherwise, and there shall be no increase in rental in order to maintain this lease in force without drilling during its primary term in the event of the acquisition by said party of such additional interest."
|
After-Acquired Title Clause
|
|
|
"This lease shall remain in force for a period of ____ years from the date hereof..."
|
Primary Term (fixed term)
|
|
|
"...and so long thereafter as oil or gas, or either of them, is produced from said land by the lessee."
|
Secondary Term
|
|
|
"Delay Rental"
|
A payment by the Lessee to the Lessor for the purpose of maintaining the Oil and Gas Lease for a period of time (usually one year) during the primary term of the Lease. Payment of the Delay Rental temporarily excuses the Lessee's need to conduct drilling operations under the Lease.
|
|
|
"Should the first well drilled...be a dry hole, then and in that event, if a second well is not commenced...within 12 months from the expiration of the last rental period for which rental has been paid, this lease shall terminate unless lessee on or before the expiration of 12 months shall resume the payment of rentals in the same manner as herein above provided."
|
Dry Hole Clause
|
|
|
"If lessee shall commence operations for drilling...at any time while this lease is in force, this lease shall remain in force and its term shall continue so long as such operations are prosecuted whether on the same or different wells with no cessation in said operations of more than 90 days and if production results therefrom, then as long as production continues."
|
Continuous Operations Clause
|
|
|
"Pugh Clause"
|
Partial termination clause commonly associated with pooling
1 - Vertical Pugh: defined in a unit 2 - Horizontal Pugh: defined by a formation |
|
|
"Notwithstanding any wording herein contained to the contrary, it is understood and agreed if any portion of the leased premises is pooled with other lands or included in a governmental unit or unit formed under this lease, production will maintain only the lands so pooled or included in a unit, and this lease shall automatically terminate."
|
"Vertical Pugh Clause"
|
|
|
"Notwithstanding any wording herein contained to the contrary, it is understood and agreed that this lease shall automatically terminate at the expiration of the primary term as to all formations below the deepest producing formation."
|
"Horizontal Pugh Clause"
|
|
|
"Lessee may at any time and from time to time surrender this lease as to any part or parts of the leased premises by delivering or mailing a release thereof to lessor, or by placing a release of record in the proper county. After a partial surrender, delay rentals shall be proportionately reduced on an acreage basis."
|
Surrender Clause
|
|
|
"Lessor hereby warrants and agrees to defend the title to the lands herein described, and agrees that the lessee shall have the right at any time to redeem for lessor by payment any mortgages, taxes or other liens on the above described lands, in the event of a default of payment by lessor, and to be subjugated to the rights of the holder thereof."
|
Warranty Clause
|
|
|
"Doctrine of Temporary Cessation"
|
In the absence of a clause dealing with a temporary cessation of production, lessee will have a reasonable time within which to restore production in paying quantities. (mechanical difficulties, accidents, loss of market)
|
|
|
"If production...ceases from any cause after the expiration of the primary term, this lease shall not terminate provided lessee succeeds in bringing back such production within 90 days from such cessation, or within such 90 day period commences drilling thereof with due diligence to completion, and if such production is restored through any such operations, this lease shall continue..."
|
Cessation of Production Clause
|
|
|
What is required for a lessor to be responsible for his/her share of post-production cost?
|
If the royalty increases with the post-production cost proportionally. Post-production costs include:
- Dehydration - Processing - Compression - Transportation - Marketing |
|
|
"Lessee shall deliver to the credit of lessor free of cost, in the pipe line to which it may connect its well or wells, a one-fourth share of all oil produced and saved from the leased premises. Alternatively, lessor shall have the right to take, market and sell its one-fourth share of all oil in kind free of cost. If lessor elects to take its share of oil in kind at any time from time to time, lessor shall provided to lessee written notice at least 30 days prior to lessor's taking in kind."
|
Oil Royalty Clause
|
|
|
"To pay lessor for gas of whatsoever nature of kind produced and sold or used off the leased premises, or used in the manufavture of production therefrom, one-eigth of the gross proceeds received for the gas sold, used off the premises or in the manufacture of products therefrom, but in no event more than one-eighth of the actual amount received by the lessee, said payments to made monthly."
|
Gas Royalty Clause
|
|
|
"Lessor shall have the privilege at his risk and expense of using gas from any well, producing gas only, on the leased premises for stoves and inside lights in the principal dwelling thereon out of any surplus gas not needed for operations hereunder."
|
Free Gas Clause
|
|
|
"Lessee shall pay lessor for all damage to the leased premises caused by lessee's operations thereon and lessee shall remediate and restore the surface of the leased premises to its condition existing prior to this lease."
|
Surface Damages Clause
|
|
|
"Lessee shall have the right at any time to remove all pipelines, tanks, equipment, facilities, or structures on the leased premises, including the right to draw and remove casing from any well. Upon expiration of the lease, lessee shall be required to remove all pipelines, tanks, equipment, facilities, or structures and any other debris on the leased premises within 90 days and plug all wells in accordance with the rules and regulations of the Oklahoma Corporation Commission."
|
Removal of Fixtures and Equipment Clause
|
|
|
"If lessor owns a less interest in the leased premises than the entire and undivided fee simple estate therein, then the royalties and rentals herein provided shall be paid to the lessor only in the proportion which his interest bears to the whole and undivided fee."
|
Lesser Interest Clause
|
|
|
If the estate of either party hereto is assigned, and in the privilege of assigning in whole or in part is expressly allowed, the covenants hereof shall extend to their heirs, executors, administrators, successors or assigns..."
|
Assignment and Change of Ownership
|
|
|
"Top Lease"
|
An oil & gas lease granted on property which is already subject to an Oil and Gas Lease. Primary term begins
- Date Certain - Upon expiration of existing O&G Lease |
|
|
'Lessor agrees not to execute any instrument extending or renewing any presently effective oil and gas lease. This lease is subject to presently effective oil and gas leases of which lessee has actual or constructive notice."
|
Recommended Clause for protection of the Top Lessee
|
|
|
General Contract Requirements
|
1 - Offer and acceptance
2 - Two or more parties 3 - Legal subject matter 4 - Supported by consideration 5 - Writing required if contract lasts longer than 1 year or involves real property |
|
|
"Support Agreement"
|
A contract whereby a non-drilling party contributes money or acreage to the drilling party in return for geological, engineering, and other information from the well. (Dry Hole Agreement, Bottom-Hole Agreement, Acreage Contribution Agreement)
|
|
|
Farmout Agreement
|
A contract to assign oil and gas lease rights in certain acreage upon the completion of drilling obligations and the performance of other covenants and conditions therein.
|
|
|
Conditions for assignment of interest earned by the Farmee
|
1 - "Drill to Earn": Farmout acreage is earned and leasehold interest assigned when the Test Well is drilled to and tested at target depth.
2 - "Produce to Earn": Farmout acreage is earned and leasehold interest assigned when the Test Well is drilled, completed, and produces in paying quantities. |
|
|
Prior to entering into the Operating Agreement, the parties must agree on the following:
|
1 - The Operator (chosen by WI or experience)
2 - The Contract Area 3 - The target formation or depth for the Initial Well 4 - Percentage interests of Operator and Non-operators |
|
|
"Base Royalty"
|
Lowest common royalty burden
|
|
|
A party who contributes a defective title incurs the ______ Risk
|
Dry Hole Risk
|
|
|
"Balancing In-Kind"
|
Underproduced owner takes a percentage share of the overproduced owner's gas until the production imbalance is made-up.
|
|
|
"Interim or Periodic Cash Balancing"
|
Underproduced owner receives a cash payment from the overproduced owner to make-up the production imbalance prior to depletion of the well.
|
|
|
"Cash Balancing upon Depletion"
|
Underproduced owner receives cash payment from the overproduced owner to make-up the production imbalance at depletion of the well.
|
|
|
"Gas Balancing Agreement"
|
A contract between the working interest owners which governs the taking and marketing of gas and the resolution of any production imbalance resulting therefrom
|
|
|
"Division Order"
|
A Statement executed by the parties which claim an interest in production. (Identifies owner, type of interest, and quantity of interest)
|
|
|
Who is jointly and severally liable for clean-up costs?
|
Current and prior owners and operators
|
|
|
"Petroleum Exclusion"
|
Petroleum excluded from the term hazardous substance
|
|
|
6 Regulatory Compliance Statutes
|
1 - Solid Waste Disposal Act
2 - Clean Water Act 3 - Clean Air Act 4 - Safe Drinking Water Act 5 - Wildlife Protection 6 - Emergency Planning and Community Right-to-know Act |
|
|
CERCLA
|
Comprehensive Environmental Response, Compensation, and Liability Act
|
|
|
RCRA
|
Resource Conservation and Recovery Act
|
|
|
7 Pollution Claims against Lessee
|
1 - Nuissance
2 - Negligence 3 - Trespass 4 - Unjust Enrichment 5 - Breach of Contract 6 - Constructive Fraud 7 - Strict Liability |
|
|
5 Defenses to Landowner's Pollution Claims
|
1 - Statute of Limitations
2 - Coming to the nuisance 3 - Contributory negligence 4 - Release and satisfaction 5 - "Causation" |
|
|
7 Forms of recoverable damages for pollution
|
1 - Injury to real property
2 - Injury to personal property 3 - Injury to person 4 - Lost profits 5 - Annoyance, Inconvenience, discomfort 6 - Cost of remediation 7 - Punitive damages |
|
|
3 Types of relief available to Landowner for pollution
|
1 - Injunction - Landowner stops the operator's nuisance
2 - Abatement - regulatory agency imposes on nuisance 3 - Attorney Fees & Costs |
