Tennessee 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.

Tennessee Stipulation Governing Payment of Nonparticipating Royalty Under Segregated Tracts Covered by one Oil and Gas Lease refers to a legal agreement specific to the state of Tennessee that addresses the payment of nonparticipating royalties in the context of oil and gas leases when multiple tracts are involved. This stipulation is important in ensuring fair compensation for landowners whose tracts are part of a larger lease area but are not actively participating in the exploration or production activities. Here is a detailed description of the stipulation and its various types: 1. Definition and Purpose: The Tennessee Stipulation Governing Payment of Nonparticipating Royalty Under Segregated Tracts Covered by one Oil and Gas Lease defines the rules and regulations that govern the collection and distribution of nonparticipating royalties when multiple tracts are combined under a single oil and gas lease. Its purpose is to ensure that landowners who are not directly involved in the development or operations still receive appropriate compensation for their mineral rights. 2. Segregated Tracts: This stipulation specifically applies to situations where an oil and gas lease covers multiple tracts, which may be owned by different individuals or entities. Each separate tract is identified and treated independently for the purpose of calculating nonparticipating royalties. 3. Nonparticipating Royalty: A nonparticipating royalty refers to the compensation payable to a landowner who does not actively participate in the exploration or production activities on their tract. They typically lease their mineral rights to an operator while retaining the right to receive royalties based on production. 4. Calculation and Allocation: The stipulation outlines the methodology for calculating nonparticipating royalties attributable to each segregated tract. It considers factors such as the size of the tract, percentage ownership, production volumes, market prices, and applicable lease terms. The allocation is done to ensure fairness and equitable distribution of royalties among all participating and nonparticipating tracts. 5. Payment Terms: The stipulation also specifies the payment terms for nonparticipating royalties. It outlines the frequency of payment, typically monthly or quarterly, and provides details on methods of payment, such as checks or direct deposits. It may also include provisions for late payments, interests, and any applicable penalties. 6. Legal Protections: Under the Tennessee stipulation, specific legal protections are granted to landowners of segregated tracts. These protections ensure that they receive accurate and timely payments, have access to audited production records, and have the right to dispute any discrepancies or violations of the stipulation. 7. Types of Stipulations: While there may not be different types of Tennessee Stipulation Governing Payment of Nonparticipating Royalty Under Segregated Tracts Covered by one Oil and Gas Lease, specific lease agreements may have varying provisions or modifications based on individual circumstances or negotiations. It is essential for landowners and operators to understand the specific stipulations outlined in their lease agreements to ensure compliance with Tennessee's regulatory requirements. In conclusion, the Tennessee Stipulation Governing Payment of Nonparticipating Royalty Under Segregated Tracts Covered by one Oil and Gas Lease is a critical aspect of ensuring fair compensation for landowners in situations where multiple tracts are covered by a single lease. By defining the calculation and allocation of nonparticipating royalties, this stipulation protects the rights and interests of landowners while allowing for efficient exploration and production activities in the state of Tennessee.