The Cook Illinois Amendment to Oil and Gas Lease to Add Shut-In Provision For Oil Wells refers to a specific clause that can be added to an oil and gas lease agreement in the Cook County, Illinois area. This amendment allows the oil well operator to temporarily cease production while keeping the lease in effect, under certain circumstances. The purpose of this amendment is to provide flexibility to the operator by adding a shut-in provision, which becomes effective when specific conditions are met. This provision allows the operator to temporarily halt production when oil prices are low, when the well is undergoing maintenance, or when the well is temporarily unprofitable to operate. By doing so, the operator can minimize losses and preserve the lease for future profitable operations. The Cook Illinois Amendment to Oil and Gas Lease to Add Shut-In Provision For Oil Wells is advantageous for both the operator and the lessor. The operator benefits by reducing costs during periods of low profitability and by maintaining the lease for future operations. The lessor benefits by ensuring the continuity of the lease agreement and the potential for future royalties once production resumes. It is important to note that there can be different types or variations of the Cook Illinois Amendment to Oil and Gas Lease to Add Shut-In Provision For Oil Wells, depending on the specific terms and conditions outlined in the lease agreement. Some of these may include: 1. Temporary Shut-In Provision: This type of provision allows the operator to temporarily shut down the well for a defined period, such as six months or one year. The shut-in period can be extended if certain conditions persist. 2. Shut-In Provision for Low Prices: This provision allows the operator to shut-in the well when oil prices fall below a certain predetermined threshold. This ensures that the operator doesn't operate at a loss during periods of exceptionally low prices. 3. Maintenance Shut-In Provision: This type of provision allows the operator to shut-in the well for maintenance and repair purposes. It ensures that the operator can conduct necessary repairs and optimize production without breaching the lease agreement. 4. Shut-In Provision due to Profitability: In cases where the operating costs of the well exceed the revenue generated, this provision allows the operator to shut-in the well until profitability can be regained. This can occur due to rising costs or other factors impacting production economics. In conclusion, the Cook Illinois Amendment to Oil and Gas Lease to Add Shut-In Provision For Oil Wells is a valuable addition to an oil and gas lease agreement. It provides flexibility to operators in the Cook County, Illinois area, allowing them to temporarily cease production under specific circumstances. Different types of shut-in provisions can be included in the amendment, such as temporary shut-ins, shut-ins for low prices, maintenance shut-ins, and shut-ins due to profitability.
Cook Illinois Amendment to Oil and Gas Lease to Add Shut-In Provision For Oil Wells
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FAQ
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.
To shut in a well is to close off a well so that it stops producing. An emergency shutdown valve was installed on the wellhead to shut in the well at any time. The company had to shut in a well that began producing water in order to prevent contamination of the dry oil from other wells when production was commingled.
Essentially, the shut-in royalty provision allows a lessee to temporarily cease production (i.e., shut-in a well) and pay a shut-in royalty to the lessor in place of the royalty on production that is not occurring during the shut-in period.
An entireties clause usually states that even if the leased premises are subsequently divided, the land will still be developed and operated as one lease and the royalties will be divided proportionately amongst the owners of the leased acreage. Montgomery v. Rittersbacher, 424 S.W. 2d 210, 212 (Tex.
Under a community lease, the lessee is entitled to treat all tracts/interests covered by the instrument as a single leased premises, and depending on the express terms of the lease itself, operations and/or production anywhere on the tracts covered by the lease will normally be deemed to relate to the entire area
Shut in a well in the Oil and Gas Industry To shut in a well is to close off a well so that it stops producing. well. Related wordsTo cap a well also means to seal a well off and to kill a well is to stop it from flowing by the use of mud or water to stop the pressure.
In the petroleum industry, shutting-in is the implementation of a production cap set lower than the available output of a specific site. This may be part of an attempt to constrict the oil supply or a necessary precaution when crews are evacuated ahead of a natural disaster.
Under Texas law, there is a rule of non-apportionment. It sets out that when the property is subdivided after the lease is already in place on the tract, the royalties are not apportioned but given to the royalty interest owner on whose property the well physically sits.
A provision should be negotiated that requires the oil and gas company to notify the landowner when a force majeure event occurs. Title. Every oil and gas lease will contain a provision that states that the landowner warrants the title to the oil and gas and the leased premises.
In the petroleum industry, shutting-in is the implementation of a production cap set lower than the available output of a specific site. This may be part of an attempt to constrict the oil supply or a necessary precaution when crews are evacuated ahead of a natural disaster.