Title: Understanding the Kentucky Amendment to Oil and Gas Lease: Add Shut-In Provision For Oil Wells Introduction: The Kentucky Amendment to Oil and Gas Lease is a legal provision aimed at addressing the temporary cessation of oil production from wells on leased lands. By incorporating a shut-in provision, this amendment offers flexibility to leaseholders and safeguards their interests during periods of non-production. In this article, we will delve into the intricacies of the Kentucky Amendment to Oil and Gas Lease, exploring its purpose, benefits, and potential variations. Key Points: 1. Definition of the Shut-In Provision: The shut-in provision in the Kentucky Amendment allows leaseholders to temporarily cease production from an oil well due to economic or operational factors, while enabling them to maintain their rights to the lease. This provision helps leaseholders avoid costly shut-ins without losing their leasehold interests. 2. Purpose and Benefits of the Amendment: The Kentucky Amendment to Oil and Gas Lease with a shut-in provision offers several advantages: a) Economic Respite: It provides leaseholders the opportunity to halt production during periods when low oil prices or excessive operational costs make extraction unfeasible, without relinquishing their rights or incurring penalties. b) Flexibility for Operators: The shut-in provision creates a mechanism for operators to pause production temporarily, allowing maintenance, equipment upgrades, or risk mitigation measures to be implemented without jeopardizing leasehold rights. c) Protection Against Lease Termination: By incorporating a shut-in provision, the leaseholder mitigates the risk of losing the lease due to temporary production stoppages. 3. Process of Amending Oil and Gas Lease to Add Shut-In Provision: a) Consultation with Legal Professionals: It is recommended that leaseholders seeking to include a shut-in provision in their lease consult with legal experts specializing in oil and gas laws to ensure compliance with Kentucky state regulations. b) Drafting the Amendment: The leaseholder, with the assistance of legal counsel, should prepare a written amendment specifying the terms and conditions under which the shut-in provision applies. c) Execution and Documentation: Once agreed upon by both parties, the amendment must be executed, signed, and appropriately recorded with the Kentucky county clerk's office for its legal validity. Types of Kentucky Amendment to Oil and Gas Lease to Add Shut-In Provision: 1. Standard Shut-In Provision: This amendment outlines the requirements and conditions for a temporary cessation of production, allowing leaseholders to shut-in the oil well for a pre-defined period. It typically includes clauses related to notification, shut-in royalty payments, and time restrictions. 2. Extended Shut-In Provision: This amendment variant permits leaseholders to shut-in the oil well for an extended period beyond the standard limit, typically exceeding the standard shut-in duration. It may involve additional terms and conditions beyond those found in the standard shut-in provision. Conclusion: The Kentucky Amendment to Oil and Gas Lease incorporating the shut-in provision is crucial for leaseholders as it provides necessary flexibility and protection during periods of non-production. By allowing temporary shut-ins under agreed-upon conditions, this amendment ensures leaseholders can navigate economic challenges while maintaining their leasehold interests. Consultation with legal professionals is advised to understand the nuances of the Kentucky Amendment and tailor it to specific circumstances.
Kentucky 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.
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.
A clause in an oil & gas lease that provides that if the leased land is later owned by separate parties, such as in a sale of part of the property, the lessee can continue to operate, develop, and treat the lease as a whole and pay royalties to each owner based on its percentage of ownership of the entire area.
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.
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.
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.