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Anatomy of an oil and gas lease
A printed lease runs a few pages, but it is built from the same thirteen parts nearly every time. Pick a drawer to see what each part does, what to look for, and the guide that goes deeper.
A drawing of a sample lease loads here. Every part is also listed below.
Royalty clause
Your share of production, written as a fraction such as 3/16 or 1/5.
Look for: A blank or low fraction, or royalty figured "at the well".
All 13 parts, as a list
Granting clause
Who leases what to whom: your name, the company, the substances, and what the company may do on the land.
Look for: Minerals beyond oil and gas, and uses such as disposal or injection for other land.
Legal description
Which land: the survey, section or lot, and the acres, often stated "more or less".
Look for: A description that does not match your deed, or an exhibit that is missing.
Term and habendum
How long: the primary term in years, then "as long thereafter" as oil or gas is produced.
Look for: An option to extend, and what counts as operations that hold the lease.
Royalty clause
Your share of production, written as a fraction such as 3/16 or 1/5.
Look for: A blank or low fraction, or royalty figured "at the well".
Deductions or cost-free language
Whether costs after the well can come out of your royalty.
Look for: "Net proceeds" or "at the well" with no cost-free sentence.
Pooling clause
Lets the company combine your land with your neighbors' land into one unit.
Look for: No limit on unit size, and no notice to you.
Pugh clause
Releases land outside producing units, so one small unit cannot hold everything.
Look for: No Pugh clause at all. Many printed forms leave it out.
Shut-in clause
Keeps the lease alive with a payment while a well waits for a pipeline or market.
Look for: No limit on how long shut-in payments can hold the lease.
Depth limits
Which depths the lease covers, and when unused depths come back to you.
Look for: Every depth held by one well in one formation.
Warranty
Whether you stand behind your title if it turns out you own less.
Look for: A general warranty, especially on inherited minerals.
Assignment
Who can end up holding the lease after you sign it.
Look for: No notice to you when the lease changes hands.
Signatures and acknowledgment
Who signs, and the notary block that lets the lease be recorded.
Look for: Blank spaces, a signature page sent by itself, or missing exhibits.
Recording stamp
The county clerk's stamp: book and page or instrument number, and the date it went on record.
Look for: A lease recorded before the bonus is paid.
Have a lease in hand?
Tell us what you got and what you want to know. We reply by email and tell you how to send the pages. A landman reads them and sends back a one-page review sheet.
Email hello@landman.review with what you got and your question, or call (307) 263-8515.