This form is used to resolve any question as to how royalty is to be paid to the Parties in the event of production, under the Lease, on any part of the Lands. The Parties are entering into this Agreement to stipulate and agree to the ownership of each Party's respective share of the royalty reserved in the Lease payable for production attributable to their Interests from a well located anywhere on the Lands.
The Michigan Agreement Governing Payment of Nonparticipating Royalty Under Segregated Tracts Covered by one Oil and Gas Lease is a legal document that outlines the terms and conditions of royalty payments for nonparticipating owners of segregated tracts covered by an oil and gas lease in the state of Michigan. This agreement ensures fair and consistent payments to nonparticipating owners while allowing for the efficient exploration and development of oil and gas resources. Under this agreement, nonparticipating owners receive royalty payments based on the production and sale of oil and gas extracted from the leased tracts. The agreement specifies the percentage of royalty that the nonparticipating owners are entitled to and outlines the mechanism for calculating and distributing these payments. One important aspect of this agreement is the segregation of tracts. Segregation refers to the division of a leased area into separate tracts, which may have different owners or interests. By defining the specific tracts covered by the lease, the agreement ensures that royalty payments are allocated accurately to each nonparticipating owner based on their proportionate share of the leased area. There are different types of Michigan Agreements Governing Payment of Nonparticipating Royalty Under Segregated Tracts Covered by one Oil and Gas Lease, each tailored to specific circumstances and needs. Some variations include: 1. Standard Segregation Agreement: This type of agreement is commonly used when the leased area is divided into multiple tracts, each with different nonparticipating owners. It specifies the allocation of royalty payments among the owners and includes provisions for reporting and auditing procedures to ensure transparency and accountability. 2. Unitization Agreement: In cases where several contiguous tracts are combined into a single production unit, an unitization agreement may be used. This type of agreement establishes the terms for sharing royalties among the nonparticipating owners of the different tracts within the unit. 3. Multi-Lease Agreement: When multiple oil and gas leases are involved, covering different tracts but with overlapping ownership interests, a multi-lease agreement can be used. This agreement coordinates the payment of royalties to the nonparticipating owners across all leases, ensuring consistency and fairness. Overall, the Michigan Agreement Governing Payment of Nonparticipating Royalty Under Segregated Tracts Covered by one Oil and Gas Lease provides a framework for equitable and efficient royalty payments to nonparticipating owners, promoting responsible oil and gas exploration and development while protecting the interests of all parties involved.
