1. What is an Oil and Gas Lease?
The Oil and Gas Lease is not a lease in the traditional landlord/tenant sense. Your Oil and Gas Lease is both a conveyance and a contract. The Lessor (the owner of the minerals) conveys to the Lessee (such as Thunderbird) the right to explore for and produce oil and gas. The oil and gas lease is also a contract between the Lessee and the Lessor under which the rights and obligations of the parties are stated concerning the use of the land to explore for and produce oil and gas, for certain consideration and subject to certain express and implied promises.
2. What is a "No Surface Use" lease?
It means that the drilling company will not be using the Surface of your property in any way. Many of our leases are of this type. If surface use is not to be permitted any lease should clearly state there will be no surface lease.
3. What is a bonus payment?
Bonus is the money paid when an oil and gas lease is executed. It is often referred to as "up-front money".
4. What is Royalty?
Royalty is the mineral owner's share of the production of oil or gas as provided in the lease. It typically is a percentage of what is sold or produceed adjusted for the extent of mineral ownership.
5. What is the primary term?
This is the amount of time the Lessee has to commence development operations as provided in the lease. Leases also usually provide that the lease will stay in effect after the primary term so long as oil or gas are produced or non-production is allowed under the terms of a lease.
6. What is pooling?
Pooling is a process usually pursuant to the terms of a lease where one or more tracts are joined into one unit to be developed. When tracts are too small to support a well pooling is necessary to develop mineral property. Mineral owners share in production from the pooled tracts in accordance with their royalty, size of tract and mineral ownership.
7. What is horizontal drilling?
In the Barnett Shale, a well is drilled vertically for more than a mile from the surface, and then gradually turned until it is horizontal to the surface.
8. What is a pad site?
The location of actual drilling operations.