Oil and Gas Lease Form

What Is an Oil and Gas Lease Form?

An oil and gas lease land contract is a legal form where landowners (“lessors”) provide energy companies (“lessees”) with the right to explore, extract, produce, and distribute oil and gas sources from private land property. This legal document protects the landowner’s rights, confirms the lease legality for state governments, and outlines all terms and conditions of oil and gas extraction for the established royalty price.

Types of Gas Lease Forms

There are two simple types of oil and gas lease purchase option contracts – a surface or subsurface lease and a right of first refusal lease agreement.

Surface or Subsurface Lease

This type of oil and gas lease purchase agreement describes the features of land work that the lessor creates for the lessee. If necessary, the landowner can also limit them and the surface square for oil exploration and extraction. The landowner can control other essential tools for hydrocarbon operations:

• Discovering suitable lands for drilling, for example, fields and forests, and studying their geology;
• Researching underground areas for equipment sound wave relevance;
• Drilling facilities storage, etc.

As a landowner, you can always restrict the activities on your property land if you find them inappropriate. However, all the parties’ obligations remain negotiable for oil and gas lease forms.

Right of First Refusal

This type of oil and gas lease option contract implies that your current document will not be renewed, and the energy development company refuses any land lease offers from other landowners. In all opposite cases, oil and gas lease option contracts renew automatically, preserving the same duration and scope of work.

When Should an Oil and Gas Lease Land Contract Be Used?

Energy companies use geological maps to search for a perfect land to start drilling oil or gas and/or producing various hydrocarbon products. If you have a vast private land property, land businessmen can easily reach out to you and offer to cooperate. 

Providing land acres for hydrocarbon exploration and development can become a perfect business opportunity for landowners if both sides negotiate correctly with a well-composed landman oil and gas lease form template. This kind of legal document has been well-known for over a hundred years and has gathered all the essential points for a perfect document structure and reliable business growth and partnership.

Standardized lease agreements for oil and gas may often lack industry-specific clauses. In cooperation with land managers and attorneys, Lawrina legal professionals have created a sample of a state-compliant oil and gas lease purchase agreement, with up-to-date industry-related provisions. Using this Lawrina’s legal form, you will manage to set all core details of your land deal. Below you will see the crucial components of a general oil and gas lease letter template.

What Should Be Included?

Before drafting your blank oil and gas lease form template as is, make sure you have the following information:

• The full description of your land property: location, square footage, ownership;
• The lease term and duration dates: when the lease starts and expires;
• Consideration, or the bonus fees;
• Fees;
• Parties’ personal information: full names, companies, occupation, contact methods.

Now you should correctly insert these details in the following clauses of oil and gas lease letter templates:

• Granting clause: this fundamental provision of energy documents legalizes the oil company’s right to develop the source on a specific land as agreed by its owner;
• Term clause, or habendum clause: this provision specifies the type of the lease term and its starting and expiry dates;
• Royalty clause: this provision defines the amount of royalty paid to landowners;
• Pooling clause: this provision allows lessees to merge the lands so that they can set all the necessary equipment for oil and gas exploration, extraction, and production;
• Pugh clause: if you have your land surface protected, the energy company takes all responsibility for oil or gas leakage and damage made to your land as a result;
• Shut-in royalty clause: the lessee will continue paying for the land if the production of oil and gas cannot be marketed due to the pipeline connection or other reasons.

These clauses only gain their legal force in oil and gas lease purchase agreements.

How To Write an Oil and Gas Lease Form Template: Step-By-Step

Step 1 – Negotiations

Negotiations between the parties play a significant role in oil and gas deals. Specific rules will help the parties achieve their goal and start their cooperation immediately.

First, landowners should research the oil and gas companies offering them the mineral resources lease and set the whole production on their land. It is recommended to pay attention to the type of entity that contacted the lessor (e.g. a land manager, a broker, or someone working on the same tasks as these two) and the oil and gas company itself (its market presence, number of successful leases, location, etc.)

When lessors have found potential lessees, they should arrange meetings and discuss the exact information related to the clauses of oil and gas forms. This can be:

• The type of your lease term;
• The lease duration;
• All kinds of royalties;
• Bonus fees.

Step 2 – Filling Out the Template

You can use this Lawrina’s template to draft your oil and gas lease. When having all the aforementioned information, you can put it in the document sample. Lawrina’s questions related to this oil and gas lease form will help you fill it out to the tiniest details. 

When you finish editing your template, Lawrina will send it to you via email or you can download the printable PDF version immediately.

Step 3 – Final Revisions & Signatures

You can review your document once again and forward it to the other parties if all is set. You can also give the agreement to your energy attorney for more qualified revision.

When both parties agree to the lease document content, they can sign it and have it notarized at their public state institutions.