The Virgin Islands Amendment to Oil and Gas Lease to Add Shut-In Provision For Oil Wells is an important legal provision that allows for the temporary cessation of production in oil wells located in the Virgin Islands. This amendment is significant as it provides flexibility to oil and gas lessees and helps protect the natural resources of the region. The primary purpose of the Virgin Islands Amendment is to add a shut-in provision to oil and gas leases. A shut-in provision allows the lessee to temporarily halt production in a well without breaching the terms of the lease agreement. This provision can be activated when certain conditions are met, such as when oil prices drop significantly or when the well is undergoing necessary maintenance or repairs. Including a shut-in provision in an oil and gas lease agreement is advantageous for both the lessee and the Virgin Islands. It allows lessees to reduce operating costs during periods of low oil prices or when wells require maintenance, ultimately preserving their financial viability. Additionally, the provision permits the Virgin Islands to regulate and manage oil and gas operations more effectively, ensuring the conservation and sustainability of the region's natural resources. Different types of Virgin Islands Amendments to Oil and Gas Lease to Add Shut-In Provision For Oil Wells may include variations in the specific conditions or timeframes required for activating the shut-in provision. For example, one type of amendment might stipulate that the shut-in provision can be utilized if oil prices remain below a certain threshold for a specified period. Another type of amendment could require lessees to provide detailed plans for well maintenance before activating the shut-in provision. In conclusion, the Virgin Islands Amendment to Oil and Gas Lease to Add Shut-In Provision For Oil Wells is a vital legal provision that allows for the temporary cessation of oil well production. It provides flexibility to lessees, helps protect the natural resources of the Virgin Islands, and ensures the efficient and sustainable management of oil and gas operations in the region.
Virgin Islands Amendment to Oil and Gas Lease to Add Shut-In Provision For Oil Wells
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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.
Key Provisions of Producers 88 Lease Form Granting Clause: This section outlines the rights granted by the lessor (landowner) to the lessee (oil company) for the exploration and production of oil and gas on the leased property.
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.
Surrender Clause A clause commonly found in an oil and gas lease authorizing a lessee to release its rights to all or any portion of the leased premises at any time and be relieved of further obligations relating to the acreage surrendered.
In the petroleum industry, shutting-in is the implementation of a production cap set lower than the available output of a specific site. This may be part of an attempt to constrict the oil supply or a necessary precaution when crews are evacuated ahead of a natural disaster.
By way of background, a ?free use? clause is a provision in an oil/gas lease which gives the lessee the right to use gas produced from the leasehold.
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.