Michigan Amendment to Oil and Gas Lease to Extend the Primary Term of the Lease on Part of the Lands Subject to the Lease Key Terms: Michigan, Oil and Gas Lease, Amendment, Extend, Primary Term, Lands, Subject to the Lease The Michigan Amendment to Oil and Gas Lease to Extend the Primary Term of the Lease on Part of the Lands Subject to the Lease refers to a legal document that allows parties involved in an oil and gas lease to extend the primary term of the lease agreement for a specific portion of the lands covered by the original lease. The primary term of an oil and gas lease typically defines the initial period during which the lessee is granted the exclusive rights to explore, extract, and produce oil and gas resources from the leased property. However, circumstances may arise that require the extension of the primary term on only a portion of the leased lands. There are different types of amendments to oil and gas leases in Michigan that allow for the extension of the primary term on specific parts of the leased lands. These may include: 1. Partial Extension Amendment: This type of amendment applies when the lessor and lessee agree to extend the primary term of the lease on only a specific portion of the lands subject to the lease. This typically occurs when the lessee has completed exploration or extraction activities successfully on one part of the property but requires more time to complete activities on the remaining areas. 2. Selective Extension Amendment: In certain cases, the lessee may request an amendment to extend the primary term on selected sections of the leased lands. This could be due to varying geological factors, resource potential, or logistical considerations. The lessor would evaluate the request and negotiate the terms accordingly to address the specific areas in question. 3. Limited Term Extension Amendment: Sometimes, an amendment is necessary to extend the original lease's primary term but for a limited duration or a phased approach. This might occur when the lessee needs additional time to carry out exploration or production operations on specific portions of the lands in a progressive manner. These various types of amendments ensure flexibility and fairness between the lessor and lessee in oil and gas lease agreements, as they address the specific needs and circumstances regarding the extension of the primary term on only part of the lands subject to the lease. It is crucial for both parties involved to consult legal professionals specializing in oil and gas law and carefully review and negotiate the terms of the Michigan Amendment to Oil and Gas Lease to Extend the Primary Term before executing the agreement. The amendment should outline the specific areas and terms related to the extension, including the duration, rental obligations, royalty provisions, and any additional conditions or requirements.
Michigan Amendment to Oil and Gas Lease to Extend the Primary Term of the Lease on Part of the Lands Subject to the Lease
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FAQ
Royalty Rates: The royalty agreement or rate is a percentage of total revenue gotten from the sale of oil and gas, and it's always outlined in the lease agreement. The royalty percentage is usually 12.5% to 15% but can change based on regional regulations or negotiations.
The primary term is the initial period during which a well may be drilled. If a successful well is drilled within the primary term, the lease will extend for as long as the well remains productive. If a well is not drilled within the primary term, the lease will usually expire.
The primary term on average is 3 years. Companies can add a 2-year extension if they wish. The company that executed the lease uses this time period to achieve drilling the well. Once that is completed, the secondary term begins and lasts for as long as the well is producing.
In oil and gas leases, the habendum clause defines the primary term and secondary term of the lease, dictating how long the lease is in force. When used in the context of oil and gas leases, the focus of the habendum clause is on the "and so long thereafter" portion that extends the lease if conditions are met.
An assignment of oil and gas lease is a contractual agreement between a landowner and an oil or gas company in which the company gains the right to explore for, develop, and produce oil and gas from the property.
At that point, your oil and gas lease is extended beyond the primary term into the secondary term and continues as long as the condition(s) for the existence of the secondary term occurs; e.g., ?and as much longer as oil and gas are produced,? meaning, in this example, that the secondary term will continue as long as ...
Once granted, an oil and gas lease gives the lessee a primary term ranging from 5 to 10 years, depending on water depth, to explore and develop the lease. A lessee must relinquish the lease if no activity has occurred within that specified amount of time.
To ?ratify? a lease means that the landowner and oil & gas producer, as current lessor and lessee of the land, agree (or re-agree) to the terms of the existing lease.