The West Virginia Amendment to Oil and Gas Lease for Paid-Up Extension of Primary Term of Lease is an important legal document that allows parties involved in oil and gas leases to extend the primary term of the lease by making a payment to the lessor. This amendment ensures that the lessee can continue to explore and extract valuable resources from the leased property for a specified period. The primary term of an oil and gas lease refers to the initial period during which the lessee has the right to explore, drill, and develop the property for oil and gas production. However, sometimes lessees require more time to fully explore and exploit the potential of the leased property. In such cases, the West Virginia Amendment to Oil and Gas Lease for Paid-Up Extension of Primary Term of Lease provides a legal framework for extending the primary term. This amendment is specifically applicable to oil and gas leases in West Virginia and is used when the lessee decides to extend the primary term by making a payment to the lessor. By entering into this amendment, the lessee secures the right to continue operations and production on the leased property beyond the initial primary term. It is worth noting that different types of West Virginia Amendment to Oil and Gas Lease for Paid-Up Extension of Primary Term of Lease may exist, depending on the specific circumstances and negotiated terms between the lessor and lessee. Some possible variations include: 1. Lump-Sum Payment Amendment: This type of amendment requires the lessee to make a one-time payment to the lessor in exchange for the extension of the primary term. The lump-sum payment is typically determined based on factors such as the size of the leased property, potential resource reserves, and market conditions. 2. Incremental Payment Amendment: In this case, the lessee may opt to extend the primary term by paying a series of incremental payments over a specified period. This type of amendment allows the lessee to distribute the financial burden of the extension over time. 3. Royalty Percentage Amendment: Instead of making a direct payment, the lessee may negotiate an increased royalty percentage to be paid to the lessor for the leased property during the extended primary term. This type of amendment can be a mutually beneficial arrangement, with the lessor receiving an enhanced share of the revenues generated from oil and gas production. The West Virginia Amendment to Oil and Gas Lease for Paid-Up Extension of Primary Term of Lease is a critical contractual tool that provides flexibility and opportunities for both the lessor and lessee. It allows lessees to extend the primary term and fully explore the potential of the leased property while ensuring the lessor receives adequate compensation for granting the extension.
West Virginia Amendment to Oil and Gas Lease for Paid-Up Extension of Primary Term of Lease
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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.
There are two terms in a gas and oil lease: known as the primary term and the secondary term. Normally, the primary term is for a specific amount of time which lasts between the period of 1, 3, 5, 7 or 10 years.
If a lease is a "paid-up" lease, then the lease will remain in effect during the entire primary term with no further payments to the Lessor unless and until actual production of oil or gas is established.
Negotiating an oil and gas lease will require some research upfront. If you're a landowner interested in working with an oil and gas company, you should explore their history and experience. You'll want to work with a reputable company that works in your best interests, holds a high standard, and maintains insurance.
An oil or gas lease is a legal document where a landowner grants an individual or company the right to extract oil or gas from beneath the landowner's property. Courts generally find leases to be legally binding, so it is very important that you understand all the terms of a lease before you sign it.
§37B-1-4. Lawful use and development by cotenants; election of interests; reporting and remitting of interests of unknown or unlocatable cotenants; establishment of terms and provisions for development; and merging of surface and oil and gas.
In addition to a signing bonus, most lease agreements require the lessee to pay the owner a share of the value of produced oil or gas. The customary royalty percentage is 12.5 percent or 1/8 of the value of the oil or gas at the wellhead.
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.
