North Carolina Amendment to Oil and Gas Lease to Add Shut-In Provision For Oil Wells: In North Carolina, an amendment to the oil and gas lease is necessary to include a shut-in provision for oil wells. This provision allows the lessee to temporarily cease production without forfeiting the lease. It is important to understand the different types of amendments available for oil and gas leases in North Carolina. 1. Shut-In Royalty Provision Amendment: This type of amendment outlines the conditions under which the lessee can shut-in the oil well and continue to hold the lease. It specifies the period of shut-in and the royalty payment to be made to the lessor during this inactive phase. The shut-in royalty acts as a compensation to the lessor for not actively producing oil during the shut-in period. 2. Shut-In Well Maintenance Amendment: This amendment focuses on the maintenance and preservation of shut-in oil wells. It establishes the lessee's responsibilities for regular inspections, necessary repairs, and measures to prevent any environmental hazards during the shut-in state. This type of amendment ensures that the well remains in good working condition and adheres to safety regulations while not in production. 3. Shut-In Contractual Obligations Amendment: This amendment covers the contractual obligations between the lessor and the lessee during the shut-in period. It outlines the terms for notifying the lessor about the decision to shut-in the well, the expected duration of the shut-in, and any specific requirements or obligations that both parties need to fulfill during this time. This amendment ensures clear communication and compliance between the lessor and the lessee. 4. Shut-In Royalty Reduction Amendment: This type of amendment allows for a reduction in royalty payments during the shut-in period. It stipulates a lower royalty rate to be paid to the lessor for the oil produced after the well resumes active production. It can be beneficial for the lessee in cases where the oil prices are low, and shutting-in the well temporarily is financially more feasible than continuing production at a loss. Furthermore, it is essential to consult legal professionals specializing in oil and gas leases in North Carolina to draft an appropriate amendment incorporating the shut-in provision. These amendments address the necessary terms and conditions required to protect the interests of both the lessor and lessee while providing flexibility in oil well operations.
North Carolina Amendment to Oil and Gas Lease to Add Shut-In Provision For Oil Wells
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FAQ
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.
In a few words, a pooling clause is written into a lease. This oil and gas clause allows the leased premises to be combined with other lands to form a single drilling unit. It's not uncommon for there to be a pool of oil or gas under numerous parcels of land.
Granting Clause: This clause specifies: (a) the land that is being leased; (b) which minerals are being leased (oil, gas, uranium, etc.); and (c) and what rights the production company has to use the surface land in an effort to produce the leased minerals.
Granting Clause: The clause in the deed that lists the grantor and the grantee and states that the property is being transferred between the parties.
A ?special warranty? is a covenant made by the lessor to defend the lessee against encumbrances or clouds on the oil and gas title created by the lessor during his ownership of the estate. The protection offered by this warranty is therefore limited to those title defects caused or created by the lessor himself.
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.
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.