Things to be Considered Before Signing Agreements for Oil and Gas Leases

By | November 4, 2011

Oil and gas lease agreements include a lot of documentation which is in legal terms. The agreement contains many clauses which includes lot of information in which every point is important and to be cross checked twice in order to get a better idea about the agreement. Since the agreements are done by the mining companies they are mostly favorable to them. Hence it is the responsibility of the landlord to check whether the contract is justifying both the parties and is including all the points mentioned by him.

Every land owner should thoroughly check the oil and gas lease and make sure that all things mentioned and agreed by both the parties are existing. If there are any items or proposals in the lease that the land owner does not agree, then he/she has every right to discuss on it and see to it that possible changes and adjustments are made.

Moreover, the land owner needs to take extra care while observing the royalties, terms and policies which are mentioned in the agreement. Make sure that the discussed percentage of royalty is mentioned in the agreement for the agreed period of time. There are primary and secondary term in the agreement which are to be observed with great care and attention so that every thing is clear to the parties before going to the agreement. Also try to include the period of time for the royalty payment the interests for the late payment of royalty, so that you can receive your benefits in time.

Don’t go blindly according to the suggestions of the people or your friends who have already dealt with such kind of lease agreements for their lands. Because they might not have spend much time in observing the policy and let you do the same thing with their suggestions. Instead if you have any doubts go take help of the local attorney and clarify yourself before entering the deal. Above all, researching in the market regarding the oil and gas rates at that time is quite useful in order to get good deals and to make better agreements.