Ratify Lease Agreement

This is a big question, especially if you already have a lease with the company making the request. Why is the company coming to you now to ask for an “extension” of a lease that is still in effect? Third, new leases often include favorable terms for landowners. They often include clauses for increased domestic use, land use restrictions, restrictions on pipeline placement, etc. Can you negotiate these conditions for “ratification”? For the oil and gas industry, lease ratification is the term used to request acceptance of an existing lease with or without modifications from landowners who purchased parcels to which the original tenant granted permission to drill and produce. Ultimately, the tenant needs them to “accept again” the original lease (perhaps change some conditions here and there) so that the tenant can sell those gas rights to one of the few dozen shale oil developers. Think before you sign. 1. Ratification of the lease. All parties ratify the terms of the lease as modified by this agreement.

The lease specifies what the landowner receives in exchange for approval of test wells that could produce significant amounts of oil and gas. Most leases offer the landowner drilling premiums and ongoing royalty payments on production resulting from wells on the property. Leases can take decades. The owners die or sell the land, and the heirs or new owners must be approached for a lease. Ratifying an existing lease without modification is an efficiency for the tenant. Second, you need to understand the market. Is the tenant offering increased premiums and royalties an incentive to ratify? How much could reasonably be achieved if your land were free of the existing lease? A lease is developed when an oil or gas company explores the geological formations that underlie a particular region. If the Corporation believes that there is potential for mineral exploration and production, it will contact the landowner who holds the rights to the minerals to apply for a lease. The answer is probably no. Do you know what it means to “ratify” the lease? Do you know why the current tenant wants you to sign a “ratification”? Do you know what the market would pay in premiums and royalties for your land if you didn`t already have a lease? Do you know what other landowner protections will be included in the new leases? Until you know the answers to these questions, you shouldn`t sign anything. If you are your own royalty or a non-executive mineral interest, you will also have to do your homework.

Get a copy of the lease you are supposed to ratify. Finally, if you hold a non-executive mining interest and are entitled to a share of the premium paid for the lease, you must be sure that you will receive your share of the premium. The entire bonus may have been paid to the owner of the executive interest, in which case you have a claim against the owner of the executive interest to receive your share of the bonus. Or the company requesting ratification may have taken and registered the lease but did not pay you your share of the bonus. A compatriot in the company may tell you that you are not eligible to receive your share of the bonus unless you ratify the lease. That is not correct. You are entitled to your share of the bonus, whether or not you ratify the lease. The contract contains information about the initial test drilling agreement and the long-term production activities that may follow.

You are a landowner with a current oil and gas lease for your property, and the current tenant sends a man from the countryside to ask you to “ratify” your existing lease. Should you do that? In all likelihood, the tenant (usually the current producer) believes that you have legitimate reasons to break the existing lease. A common reason is that there has been little or no production of your property. Your existing lease may not include unification or pooling language, and the tenant now wants to add it as part of the “ratification.” (However, this is not a reason to cancel the lease). The current lease may contain conditions relating to superficial and deep rights that make the property unsaleable to “deep” producers. First of all, you need to know why the tenant wants to ratify. It is important to know the strength of your case when trying to break the existing lease. First, there is a review of oil and gas leases, and then we will look at the basic principles of ratifying oil and gas leases: why it is necessary, how it can be implemented, and what precautions should be taken. We also have a bit of stuff about non-executive owners who need to pay close attention to the conditions. In short, you should treat ratification as if the company is approaching you for the first time to lease your mining rights. If you are asked for ratification, you probably have a better negotiating position.

If there was no value to your mining rights, the Company would not lobby to ratify the agreement with new owners or lessors who could break the lease. However, ratification doesn`t just work for the tenant. A licensee, even if not participating, can generate significant income if the person does the right homework before agreeing to “renew” the lease. For example, if a landowner divides and sells land with mineral production, the new owners of each parcel are asked to ratify the lease, usually on the original terms. The tenant reduces the paperwork and leg work required to continue producing from these wells under new supervision. After ratification, all provisions of the lease will remain in effect unless the landlord (the landowner) objects and requests changes to the language of the existing contract. If the landowner is asked to ratify, he is likely to have the best negotiating position. However, the landowner often does not have enough information to negotiate effectively. Oil and gas leases are contracts that govern the relationship between the landowner who holds mining rights and the production company that explores or drills the land.

The real question is why? Why is the man from the countryside coming to you now? If you already have an existing lease, why would the tenant want you to sign something new? There are several things you need to understand before ratifying the existing lease without any changes. You may find that you need revisions before you can agree to continue leasing mineral rights. 1. Ratification of the lease. The Parties ratify and approve the terms of the Lease as amended by this Agreement, which shall remain in full force and effect. The parties acknowledge that the lease expires on [LEASE EXPIRY DATE]. Oil and gas leases are complicated at best and can become even more complicated over time. During a rental period, you may be asked to ratify a lease due to any change.

What does this mean exactly? That is what we are talking about today. The lease you wish to ratify must contain specific information in a standard format, including legal descriptions of the property and its use, terms of use, identity of the parties to the lease, and information about payment and consideration. In Texas, oil and gas companies do not have the right to pool the interests of royalties and non-executive mine owners without their express consent. Pending the signature of ratification by the holders of the shares concerned, the lease will not be in effect for the purposes of the merger. Ratification of a lease agreement by a licensee or non-executive mine owner may or may not be in their best interest, depending on the circumstances. If you have a non-executive royalty or mining interest and are asked to sign a lease confirmation, you must first request a copy of the lease agreement that you must ratify. .