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 Mississippi Reservation of a Call on, or Preferential Right to Purchase Production by Lessor is a legal tool used in the oil and gas industry to protect the lessor's interest in the production from their leased property. This provision grants the lessor certain rights and privileges when it comes to purchasing the oil or gas produced from their land. Let's explore this concept in more detail, along with its various types. The concept of a "reservation of a call on, or preferential right to purchase production by lessor" gives the lessor the right to be the first and foremost option for purchasing the extracted resources from their leased property. This mechanism ensures that the lessor can retain a portion of the produced oil or gas for their own use or benefit. One type of reservation of a call on, or preferential right to purchase production by lessor is the "overriding royalty interest" (ORRIS). This type of interest allows the lessor to receive a certain percentage of the revenue generated from the production, typically without bearing any of the costs associated with production or operating expenses. Another type is the "net profits interest" (NPI), where the lessor is entitled to a percentage share of the net profits from the sale of the produced oil or gas. Net profits are calculated after deducting costs such as production expenses, royalties, and taxes. The reservation of a call on, or preferential right to purchase production by lessor can also be structured as a contractual right rather than a direct interest in the production. In this case, the lessor has the option to purchase the production at a predetermined price or under certain terms and conditions. This provision offers the lessor a level of control over the marketing and sale of the resources. Implementing the reservation of a call on, or preferential right to purchase production by lessor requires appropriate documentation within the lease agreement. The language used must be specific and clear on the lessor's rights, responsibilities, and the terms under which they can exercise their call or preferential right. Keywords: Mississippi reservation, call on production, preferential right, lessor, purchase production, oil and gas industry, leased property, overriding royalty interest, net profits interest, contractual right, lease agreement, documentation.
