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.
The Minnesota Reservation of a Call on, or Preferential Right to Purchase Production by Lessor is a legal provision commonly included in lease agreements between mineral rights owners (lessors) and oil and gas exploration companies (lessees) operating in the state of Minnesota. This provision outlines the rights and responsibilities concerning the sale of production from the leased property and provides an advantage to the lessor in certain scenarios. The purpose of the Minnesota Reservation of a Call on, or Preferential Right to Purchase Production by Lessor is to ensure that the lessor retains the ability to either purchase or have the opportunity to participate in the sale of the oil or gas extracted from their property. It grants the lessor the power to call on or demand a sale of the produced hydrocarbons before the lessee can sell it to third parties. This mechanism protects the lessor's interests, allowing them to benefit from market value fluctuations or preferential terms, maximizes their revenue potential, and allows them to maintain control over their property's production. There are different types of Minnesota Reservation of a Call on, or Preferential Right to Purchase Production by Lessor, including: 1. Right of First Refusal: This type of reservation gives the lessor the first opportunity to purchase the produced oil or gas at the current market price before the lessee can offer it to any other interested parties. The lessor has the right to accept or decline the offer within a defined period, usually specified in the lease agreement. 2. Preemptive Right: With this reservation, the lessor has the right to match or exceed any genuine offer made by a third party for the purchase of the produced hydrocarbons. If a third party offers to buy the production, the lessor is given the option to exercise their preemptive right and purchase the same quantity at the same terms, ensuring they have the final say in the sale. 3. Right to Participate: This reservation allows the lessor to participate directly in the sale of the production by partnering with the lessee or forming a joint venture. The lessor has the opportunity to contribute capital in proportion to their ownership interest and share in the profits generated from the sale. It's important for lessors to carefully review and understand the specific terms and conditions related to their Reservation of a Call on, or Preferential Right to Purchase Production by Lessor. The provisions may vary depending on the lease agreement and the negotiating power of the lessor. Seeking legal counsel and professional advice is highly recommended ensuring the most favorable outcome and protection of their mineral rights.
