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Lagniappe Energy Land Consultants Blog


Lessee's Interest

Lunch & Learn

Lessee’s Interest

The most important rights granted to the Lessee in  an oil and gas lease are the rights to enter the land to search for oil and gas, to produce oil and gas and to remove any that it discovers. These rights are exclusive and generally referred to collectively as the leasehold or working interest. The working interest is operating interest. It is that interest in oil and gas that includes the responsibility for all drilling, developing and operating costs.


Production In Paying Quantities

Production In Paying Quantities

Essentially all present day oil & gas leases contain habendum clauses that provide for a set primary term. Customarily three to five years, followed by a secondary term in which the lease is perpetuated by the production of oil and gas in paying quantities. Although this clause is commonly used in oil and gas leases, it doesn’t have a constant definition. Some courts interpret the language of the habendum clause strictly and require the actual, physical production and marketing of oil or gas for the secondary term to continue, others focus on the capability of production and don’t require the actual selling or marketing of oil or gas to preserve the lease. However, Texas has embraced the actual production interpretation.


The Legal Interpretation of the Oil & Gas Lease:

Whereas Commercial Leases involving residential properties are often construed by the courts in the United States against the Lessor. Oil & Gas Leases however are construed somewhat strictly against the Lessee.

The judicial minds thinks this way.The Lessor is generally an ordinary, unsophisticated individual with a minimum of resources available to him or her and who often has little or no input as to the terms of the lease. While the Lessee had their In-House teams of lawyer’s prepare the Lessor’s lease for his signature.

Thus the Lessee comes to this transaction in a superior position. As a result the Lessor should receive the benefit of the doubt when there is a legal dispute as to the terms of the lease.

Lunch and Learn


Affidavits- A written or printed declaration or statement of facts, made voluntarily and confirmed by oath or affirmation of the party making it, taken in the presence of a person having the authority to administer such oath or affirmation such as a judge or notary The person who makes an affidavit is called the affiant. Some of the more commonly used kinds of affidavits cover death and heirship, identity, nonproduction, use, occupancy & possession, and adverse possession.

Brought to you by Lagniappe Energy Oil & Gas Land Consultants, P.O. Box 62453, Houston, TX. 77205., 281-303-5516, C. M. Marshall, Principal Landman. We are currently available for contract land work, Due Diligence, Special Projects etc.

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