This lease rider form may be used when you are involved in a lease transaction, and have made the decision to utilize the form of Oil and Gas Lease presented to you by the Lessee, and you want to include additional provisions to that Lease form to address specific concerns you may have, or place limitations on the rights granted the Lessee in the “standard” lease form.
Delaware Reservation of Additional Interests in Production (RIP) is a legal concept that allows for specific types of oil and gas interests to be reserved or retained by the granter in a transfer or lease agreement. This reservation ensures that the granter or landowner still maintains certain rights and benefits even after the transfer of ownership or lease of the property. There are various types of Delaware RIP, each carrying specific implications and considerations for the parties involved. These types include: 1. Overriding Royalty Interests (ORRIS): This type of RIP grants the granter a non-operating overriding royalty interest in the production from the property. ORRIS holders are entitled to a percentage of the proceeds obtained from the sale of oil, gas, or other minerals produced from the property. 2. Carried Interests: Under this type of RIP, the granter retains a carried interest in the production, meaning they do not have to bear the costs of exploration, development, or operations related to the property. Instead, the grantee or lessee shoulders these expenses and the granter receives a percentage of the production proceeds. 3. Production Payments: This form of RIP allows the granter to retain a specified amount or percentage of the production from the property until certain conditions are met, such as the recovery of costs or a predetermined payout amount. Once the conditions are fulfilled, the production payments cease, and the grantee or lessee receives full benefits from the production. 4. Net Profits Interest (NPI): NPI is another form of RIP where the granter retains a share of the net profits generated from the property. Net profits are calculated after deducting specified costs, such as operating expenses and royalties, from the gross revenues generated by the production. 5. Diversionary Interests: In certain circumstances, the granter may retain a diversionary interest through a RIP. This means that if specific conditions occur, such as production ceasing or expiring lease terms, the property rights automatically revert to the granter. By utilizing Delaware Rips, both granters and grantees can structure agreements that allow for the sharing of risks, costs, and benefits associated with oil and gas production. It is essential for parties involved in such agreements to seek legal advice to ensure clarity, fairness, and compliance with Delaware's regulations and guidelines.
