Checklist For Reviewing Lease Forms
http://www.rmmlf.org/AI50/Checklist.doc
1. Granting Clause
• Description of leased substances
• Cover project objective: coalbed methane, helium, CO2 or other commercial gases
• Describe the leased substances consistently throughout the document
• Did you intend to include all “other minerals”
• Description of leased premises
-- Properly describe depth limitations
-- Provide surface access and subsurface easement rights related to the severed depth limitations
-- Mother Hubbard clause
• Easement and access rights
-- Are the access rights specifically described
-- Consider whether lease is taken from a split estate or the owner of the fee estate
-- Specific access rights to consider: canals, roads, ditches, ponds, levees, dams, fences, buildings, yards, pipelines, telephone and power lines, compressors, dehydration facilities, tanks, batteries, pits, meters, waterlines, and water disposal facilities
-- Coordinate the access rights with any later reversion or partial termination provisions in the lease
-- Have you provided for operations on the leased premises which may benefit adjacent lands
• Rights of the lessor
-- Surface use obligations related to lessorÂ’s operations or restricting lesseeÂ’s operations, such as set-backs or depth of gathering or flow lines
-- Reclamation of surface facilities, including addition of surface damage provisions
2. Term
• Is the habendum clause a “fee simple determinable” under state law
• Automatic termination -- are saving clauses adequate
• Consider definition of paying quantities
• Partial termination provisions or Pugh clause
3. Royalty
• Value
-- Market value
-- Proceeds
-- Fixed price
-- Affiliate sales
-- Definition of affiliate
-- Amounts actually received
• Quantity
-- Measurement point
-- Lost or used gas on and off leased premises
(entire checklist at link)
