Mayhall Fondren Blaize

Work with experienced attorney when negotiating terms of oil/gas lease agreement

In our last post, we took a look at the broad outlines of the oil and gas leasing process here in the state of Louisiana. As we noted last time, the Mineral and Energy Board is responsible for reviewing and scrutinizing the lease, and having an advocate in the negotiation process is very important.

On its website, the Office of Mineral Rights provides a sample oil and gas lease that can be perused. Like other types of contracts, oil and gas lease agreements involve a fair amount of standard language. There are also a number of issues, however, that it is very important to have carefully reviewed and to ensure things are clearly spelled out.

Some of the important areas to consider in oil and gas leasing are: the bonus; the amount and timing of royalties; shut-in payments and other payments which allow the leaseholder to maintain the lease; terms regarding the duration of the lease and the limits of the scope of the lease; terms dealing with the delayed exploitation and production of minerals; surface rights; disposal responsibilities; hours of operation; surface and subsurface damages; noise abatement; contamination; warranties on the property title; how alleged breaches of the lease will be dealt with; and the assignment of rights and obligations.

In navigating these and other aspects of oil and gas leasing, it can really help to work with an advocate who understands the issues that can come up, as well as the process of having a lease approved with the state, and who can help ensure the lessee’s rights and interests are protected. 

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