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.
West Virginia Use of Produced Oil or Gas by Lessor: A Comprehensive Overview Introduction: West Virginia, an eastern state in the United States, is rich in natural resources and is known for its significant oil and gas reserves. As a lessor of oil or gas fields in this region, understanding the various aspects of using produced oil or gas is essential to make informed decisions. This article provides a detailed description of the West Virginia Use of Produced Oil Or Gas by Lessor, covering key aspects and highlighting different types of arrangements within this context. 1. Definition of Use of Produced Oil or Gas by Lessor: The Use of Produced Oil or Gas by Lessor refers to the rights and obligations held by the lessor, who owns the mineral rights to the oil or gas reserves, regarding the utilization, marketing, and management of the produced hydrocarbons obtained from their leased lands or wells. 2. Key Elements: a. Royalty Interests: The lessor generally retains a percentage of royalty interests in the oil or gas produced from their lease, which entitles them to a share of the revenue generated from the sale of hydrocarbons. b. Lease Agreements: Lessor and lessee (operator) enter into lease agreements that outline the terms and conditions governing the use of produced oil or gas, including the duration, royalty rates, payment terms, and operating obligations. c. Marketing: The lessor may have the option to market their share of the produced oil or gas independently or rely on the lessee/operator to handle marketing and sales activities. d. Payment and Accounting: The lessor receives regular payments, often monthly or quarterly, as per the lease agreement. Detailed accounting statements are typically provided, outlining production volumes, prices, deductions, and any applicable expenses. 3. Types of West Virginia Use of Produced Oil Or Gas by Lessor: a. Standard Royalty Lease: The most common arrangement where the lessor is entitled to a fixed percentage (e.g., 12.5%-20%) of the total production volume as royalty, with the lessee responsible for all operational and marketing activities. b. Overriding Royalty Interest (ORRIS): The lessor may grant a percentage interest in the production, on top of the regular royalty, to a third party (ORRIS owner). The ORRIS owner receives a share of the proceeds derived from the lease, without bearing the costs of exploration and development. c. Working Interest: In some cases, the lessor may choose to retain a working interest, becoming a co-owner and sharing a portion of the expenses and risks associated with drilling, operations, and maintenance. The lessor receives a proportionate share of the net revenue generated. d. Net Profits Interest (NPI): Similar to a working interest, the lessor receives a share of the net profits from the lease, rather than revenue. The net profits are calculated by deducting all expenses associated with production and operation from the gross revenue. Conclusion: Understanding the West Virginia Use of Produced Oil Or Gas by Lessor is crucial for lessors in effectively managing their interests and maximizing returns from their oil or gas reserves. The types of arrangements may vary, ranging from standard royalty leases to more complex structures like Orris, working interests, or NPS. By fully comprehending these aspects, lessors can make informed decisions and ensure a mutually beneficial relationship with the lessee/operator.
