In the final part of our maintaining your oil and gas lease when curtailing production series, we review important lease considerations and seven best practices for meeting lease requirements. If you missed part one or part two of the series where we covered four lease clauses, you can read the blogs here:
- Part One: Force Majeure, Shut-in Royalty Clause, Habendum Clause
- Part Two: Production in Paying Quantities and the Cessation of Production Clause
Important Considerations to Remember Before Looking at any of the Four Clauses
Depending on where you operate, force majeure, shut-in royalties, cessation of production terms, and the Habendum clause will differ. It’s not one size fits all. Remember:
- Read everything within the four corners of your lease. Language can either be broad or narrow,
so be sure to read the printed form and the addendum.
- Oil and gas law varies from state to state.
- Identify all applicable state or federal regulations or orders governing oil and gas activity.
Depending on where you operate, force majeure, shut-in royalties, cessation of production
terms, and the Habendum clause will differ. It’s not one size fits all. Remember:
7 Best Practices for Meeting Lease Requirements
There’s a lot to navigate, but you can be successful in the secondary term with these best practices:
- Establish a workflow with land, production, accounting, and legal groups.
- Prioritize leases based on value and risk.
- Digitize and OCR all leases and contracts.
- Link GIS, accounting, land and marketing systems to monitor shut-ins.
- Review all leases and contracts for key provisions and populate critical requirements into a software monitoring solution.
- For non-operated properties, establish communication with the operator to monitor all wells shut-ins or production cut-backs.
- Consider meeting with an expert managed land service like Cinco. Since the beginning of the year, Cinco has reviewed 20,000+ fee, state, and federal leases for 15 companies from Texas to North Dakota and everywhere in between.