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.
California Shut-In Oil Royalty refers to the contractual payments made to oil royalty owners when oil production is temporarily halted or restricted in California due to economic and operational factors. These royalties are usually paid to landowners, individuals, or entities that own the mineral rights to the land where oil is being extracted. Shut-in oil royalties compensate these owners for potential lost income during the period of shut-in. The California Shut-In Oil Royalty process occurs when oil producers make the decision to reduce or cease oil production due to various reasons such as low oil prices, equipment maintenance, lack of infrastructure, or regulatory restrictions. Shutting in oil wells temporarily can be a viable strategy to avoid producing oil at uneconomical prices, avoid unnecessary wear and tear on equipment, or comply with local regulations and guidelines. Different types of California Shut-In Oil Royalty may include: 1. Temporary Production Suspension Royalty: This type of royalty is paid to oil royalty owners when production is temporarily halted for a specific duration, usually due to low oil prices. The compensation is based on the potential revenue lost during the shut-in period. 2. Regulatory Shutdown Royalty: In some cases, government agencies or environmental regulations may require temporary shutdowns of oil production in California. Regulatory shutdown royalties are paid to compensate owners for lost income during these mandated shutdown periods. 3. Equipment Maintenance Shutdown Royalty: Oil wells require periodic maintenance, repairs, or replacement of equipment such as pumps, valves, or pipelines. During such maintenance shutdowns, royalty owners receive compensation for the suspended production during the maintenance period. 4. Infrastructure Constraints Shutdown Royalty: Limited infrastructure, such as insufficient pipeline capacity or storage facilities, can lead to shutdowns in oil production. In these cases, royalty owners are entitled to receive shutdown royalties to compensate for lost production due to inadequate infrastructure. It is important to note that the specific terms, conditions, and rates of these royalties may vary depending on the agreements between oil producers and royalty owners. The amount of shut-in oil royalty is typically based on factors such as historical production rates, prevailing market prices, and the percentage of royalty owned by the individual or entity.
