Arkansas Amendment to Oil and Gas Lease to Add Shut-In Provision For Oil Wells Keywords: Arkansas, amendment, oil and gas lease, shut-in provision, oil wells Description: An Arkansas Amendment to Oil and Gas Lease to Add Shut-In Provision For Oil Wells is a legal document that allows the lessor (landowner) to modify an existing oil and gas lease agreement to include a shut-in provision for oil wells. This provision provides the lessee (oil and gas company) the ability to temporarily suspend production from a well without abandoning or terminating the lease agreement. The shut-in provision is commonly utilized when market conditions or other factors make it unprofitable or impractical to continue oil production. By adding this provision to the lease, the lessee is granted the right to temporarily shut-in the well, ceasing production but retaining the lease rights. Types of Arkansas Amendment to Oil and Gas Lease to Add Shut-In Provision For Oil Wells: 1. Arkansas Amendment to Oil and Gas Lease to Add Temporary Shut-In Provision: This type of amendment allows the lessee to shut-in a well for a specific period, usually for a maximum of a year, without resulting in a lease termination. This provision can be useful during times of low oil prices or when repairs or maintenance are required on the well. 2. Arkansas Amendment to Oil and Gas Lease to Add Permanent Shut-In Provision: This amendment allows the lessee to permanently shut-in a well. This provision may be exercised when a well becomes non-productive or commercially unviable. While the lease is not terminated, the lessee will no longer be obligated to pay royalties to the lessor. 3. Arkansas Amendment to Oil and Gas Lease to Add Shut-In Provision with Royalty Payments: This type of amendment allows the lessee to shut-in a well while still making royalty payments to the lessor. It provides a compromise solution in situations where the lessee wants to temporarily suspend production but wishes to continue meeting the financial obligations of the lease. Arkansas Amendment to Oil and Gas Lease to Add Shut-In Provision For Oil Wells offers flexibility for both the lessor and lessee in managing the oil production process. It takes into account the fluctuating nature of the oil market while ensuring the lease remains in effect with the possibility of future production resumption.
Arkansas Amendment to Oil and Gas Lease to Add Shut-In Provision For Oil Wells
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FAQ
The point of a retained-acreage provision is to be able to seek a new opportunity to lease unworked land to a different lessee, one who might do something productive with it. A Pugh clause is a negotiated provision in favor of the lessor. Pugh clauses modify pooling/unitization rights.
In such circumstances where a gas well has been completed but no market exists for the gas, the shut-in clause enables a lessee to keep the non-producing lease in force by the payment of the shut-in royalty.
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.
A Pugh Clause is enforced to ensure that a lessee can be prevented from declaring all lands under an oil and gas lease as being held by production. This remains true even when production only takes place on a fraction of the property.
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.
With a Pugh Clause, if they don't have that other 50 acres pooled into a unit within that five-year term, then they have to pay you to extend the undeveloped 50 acres for five more years. Without a Pugh Clause, they could say those 50 acres are HBP and they wouldn't have to pay you.
A clause in an oil & gas lease that provides that if the leased land is later owned by separate parties, such as in a sale of part of the property, the lessee can continue to operate, develop, and treat the lease as a whole and pay royalties to each owner based on its percentage of ownership of the entire area.
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.