A Guam Amendment to an Oil and Gas Lease is a legal document that allows for the addition of a shut-in provision to existing lease agreements pertaining to oil wells located in Guam. This provision serves as a safeguard measure for leaseholders to temporarily cease production from oil wells under specific circumstances. By incorporating this shut-in provision, leaseholders have the flexibility to shut down oil production temporarily without violating the terms of the original lease agreement. The Guam Amendment to Oil and Gas Lease to Add Shut-In Provision For Oil Wells aims to address various situations where shutting down production is in the best interest of the leaseholder. For instance, it may be relevant in cases where the market price of oil drops significantly, making it economically unviable to continue production. This provision allows leaseholders to temporarily suspend operations until market conditions improve, avoiding potential financial losses. Another application of the Guam Amendment could be to address technical or logistical issues encountered during oil well operations. For example, if a malfunctioning equipment or a significant repair is needed, it may be necessary to shut down production temporarily until the necessary repairs or replacements can be made. The shut-in provision provides the legal framework for leaseholders to pause operations while ensuring compliance with the original lease agreement. In addition, the Guam Amendment to Oil and Gas Lease to Add Shut-In Provision For Oil Wells may include clauses outlining the duration for which the shut-in can be exercised, the process of declaring a shut-in, and the notification requirements to the appropriate authorities. These clauses ensure transparency and define the responsibilities of the leaseholder in relation to the shut-in provision. Ultimately, the Guam Amendment to Oil and Gas Lease to Add Shut-In Provision For Oil Wells offers a practical solution for leaseholders operating oil wells in Guam to temporarily halt production, protect their investments, and navigate challenging market conditions or operational issues. Whether it's due to economic factors or technical difficulties, this provision allows leaseholders to maintain compliance with their lease agreement while strategically managing oil well operations.
Guam Amendment to Oil and Gas Lease to Add Shut-In Provision For Oil Wells
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Surrender Clause A clause commonly found in an oil and gas lease authorizing a lessee to release its rights to all or any portion of the leased premises at any time and be relieved of further obligations relating to the acreage surrendered.
in clause (or shutin royalty clause) traditionally allows the lessee to maintain the lease by making shutin payments on a well capable of producing oil or gas in paying quantities where the oil or gas cannot be marketed, whether due to a lack of pipeline connection or otherwise.
A Pugh Clause is enforced to ensure that a lessee can be prevented from declaring all lands under an oil and gas lease as being held by production. This remains true even when production only takes place on a fraction of the property.
In the petroleum industry, shutting-in is the implementation of a production cap set lower than the available output of a specific site. This may be part of an attempt to constrict the oil supply or a necessary precaution when crews are evacuated ahead of a natural disaster.
Royalty Payment Clauses A royalty is agreed upon as a percentage of the lease, minus what was reasonably used in the lessee's production costs. This is stipulated in a Royalty Clause. The royalty is paid by the lessee to the owner of the mineral rights, the lessor in the lease.
What is the granting clause? The granting clause is the clause under which the owner of the oil and gas rights leases the oil and gas rights to the oil and gas company along with the right to develop the oil and gas on a specifically described piece of real estate.
By way of background, a ?free use? clause is a provision in an oil/gas lease which gives the lessee the right to use gas produced from the leasehold.