New York Stipulation Governing Payment of Nonparticipating Royalty Under Segregated Tracts Covered by one Oil and Gas Lease

• Category: Oil Gas and Minerals - Agreements
• State: Multi-State
• Control #: US-OG-622
• Format: Word; Rich Text

Description

This form is used when the parties own nonparticipating royalty interests in various tracts of land. The Lease covers all of the lands owned by the parties. 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 Stipulation to stipulate and agree to the ownership of each party's respective share of the royalty reserved in the lease.

New York Stipulation Governing Payment of Nonparticipating Royalty Under Segregated Tracts Covered by One Oil and Gas Lease: A Comprehensive Overview of Nonparticipating Royalty: A nonparticipating royalty interest (NPR) refers to a distinct interest in minerals or oil and gas reserves that grants the holder the right to receive a percentage or a fixed amount of the income generated from the production and extraction of these resources. However, unlike a working interest owner, the NPR owner does not have the right to participate in the decision-making process or bear the costs associated with exploration, development, and operation. Understanding Segregated Tracts Under One Oil and Gas Lease: In the context of an oil and gas lease, segregated tracts refer to distinct portions or divisions of the leased land that are treated and accounted for separately, even though they fall under the purview of a single lease agreement. These tracts are often demarcated based on geographical, geological, or ownership factors. Each segregated tract may have separate mineral ownership and distinct royalty interests. New York Stipulation Governing Payment of Nonparticipating Royalty: The New York Stipulation Governing Payment of Nonparticipating Royalty Under Segregated Tracts Covered by One Oil and Gas Lease is a legal framework that establishes the rights, obligations, and payment mechanisms associated with nonparticipating royalty interests within such segregated tracts. It provides a standardized and consistent approach to the payment of royalties, ensuring equitable distribution of income across all parties involved. Key Provisions of the Stipulation: 1. Determination of Royalty: The stipulation outlines the method for determining the nonparticipating royalty payable to the NPR owners within each segregated tract. This can be based on a fixed percentage or a prescribed formula reflecting the production levels or market value of the extracted resources. 2. Allocation of Royalty Payments: It specifies how the royalties received from different segregated tracts under the same lease are allocated among the NPR owners. This may take into account factors such as the acreage of each tract, the applicable royalty interest rates, or any prior agreements made between the parties. 3. Measurement of Production: The stipulation establishes the procedures for measuring and verifying the production volumes from each segregated tract. This can involve the installation of measuring devices, usage of industry-standard calculations, or engagement of independent auditors to ensure accuracy and prevent disputes. 4. Record-Keeping and Reporting: It mandates the lessee or operator to maintain comprehensive records of production, sales, and royalty payments related to each segregated tract. Regular reporting intervals are prescribed to provide transparency and enable the NPR owners to verify the accuracy of the payments received. Types of New York Stipulations: While the New York Stipulation Governing Payment of Nonparticipating Royalty Under Segregated Tracts Covered by One Oil and Gas Lease is a general framework, it can be further customized or modified based on specific lease agreements, the complexity of the geological formations, or the preferences of the parties involved. Therefore, there may exist additional subtypes or variations of the stipulation, each tailored to the unique circumstances of the leased tracts and the desired distribution of royalties.