Negotiations October 25, 2012 Eric R. King
Speed controls being used in Canada... How s this for effective speed control?
I don't know about you, but this would certainly slow me down! People slow down and actually try to "straddle" the hole.
This is an actual speed control device that is currently in use. It is MUCH cheaper than speed cameras, radar guns, police officers, etc.
Pretty clever --especially when they move them around every day. Isn't art wonderful?
Definitions Williams & Meyers, Manual of Oil and Gas Terms, Thirteenth Edition
Joint Operating Agreement An agreement between or among interested parties for the operation of a tract or leasehold for oil, gas and other minerals. This type of agreement is frequently entered into before there has been any development. Typically the agreement provides for the development of the premises by one of the parties for the joint account.
The parties to the agreement share in the expenses of the operations and the proceeds of development, but the agreement normally is not intended to affect the ownership of the minerals or the rights to produce, in which respects, among others, the joint operating agreement is to be distinguished from a unitization agreement and from a mining partnership.
Non-Consent Provisions An affirmative election by a working interest owner not to participate with his/her working interest in the drilling of a well. Under a JOA, the working interest owner will have 100% of his/her interest returned/re-instated/come back in after 400% Payout on the well (4 times).
Non-Consent Interest The name which has been applied to a form of carried interest held by non-consent parties under a widely used form of operating agreement. A share of the working interest in a drilling and spacing unit whose owner does not consent to bear his proportionate share of the costs of the drilling and operation of a well, and which interest is picked up by others under the JOA who elected to participate with their proportionate share of the non-consent acreage.
Non-Consent Party A party to a joint venture, a joint operating agreement, or a pooling or unitization agreement who does not agree in advance to participate in drilling, reworking, deepening, or plugging back of a well. Under such circumstances, the interest of the non-consent party becomes subject to a nonconsent penalty.
Non-Consent Penalty A penalty against a party to a joint venture, a joint operating agreement, or a pooling or unitization agreement, or a pooling order of a state agency who did not agree in advance to participate in drilling, reworking, deepening, or plugging back of a particular well by the operator or another party to the agreement or agency order.
The penalty under a JOA is expressed as a percentage, in Oklahoma typically 4 times the recovery of the amount expended as to this non-consent interest (400%). Industry practice in voluntary pooling agreements between lessees calls for nonconsent penalties ranging from 200 to 400 percent for development of wells, at lease 300 percent for most exploratory (wildcat) wells, and in very expensive areas, particularly offshore operations, as much as 1,000 percent.
With respect to pooling or unitization orders, the non-consent or risk penalty may be fixed by statute, or the statue may give discretion to the agency to set the penalty within a determined range. The statute may define the costs subject to the risk penalty with some specificity, or it may leave the terms rather general, with the agency having the authority in either instance to resolve disputes as to costs.
Casing Point Election A right to elect whether a party wants to participate in a completion attempt. After the well has reached casing point or liner point.
Overhead A term employed loosely in the oil and gas industry to describe a variety of expenses. Monthly overhead is the amount paid to the operator under the terms set out in the JOA.
Joint Interest Billings (JIBs) Statement attached to a check disclosing well names, month of expenses, total expenses, and venturer s shares. JIB s reflect an owner s proportionate share of all costs associated with a well for a one month period (an invoice for those charges).
Area of Mutual Interest Agreements An agreement between or among parties to a farmout agreement or a joint operating agreement, or other agreement by which the parties attempt to describe a geographical area within which they agree to share certain additional leases or other interests acquired by any of them in the future.
Farmout Agreement A very common form of agreement between operators, whereby a lease owner not desirous of drilling at the time agrees to assign the lease, or some portion of it (in common or in severalty) to another operator who is desirous of drilling the tract, where there is no cash involved in the transaction.
Right of Way Agreements An agreement whereby one party acquires the rights to cross a surface owner s land for a specific purpose, e.g. for a pipeline, for a road, for a utility, for underground gas storage. This is a right to use the land for a specific purpose, but does not give ownership of the land to the right-of-way owner.
Produce to Earn Agreement
Drill to Earn Agreement
Non-Compete Agreement
Purchase and Sale Agreements An agreement for the purchase and sale of oil and/or gas produced from designated leases, setting forth the terms and conditions of purchases and sale, and requirements as to quality and condition of the product and measurement of quantities.
Statutory Pugh Clause
Habendum Clause It is agreed that this lease shall remain in force for a term of ( ) years from date (herein called primary term) and so long thereafter as oil or gas, or either of them, is produced from said land or lands pooled therewith.
Depth Clause At the end of the primary term hereof, this lease shall automatically terminate (1) as to all of the leased premises except lands located within the boundaries of a proration unit, drilling unit, spacing unit, or pooled unit, as the case may be, on which is then located a well producing in paying quantities, whether actually producing or shut-in, or upon which operations are then being conducted in
accordance with this lease; and (2) as to all depths below one hundred feet (100 ) below the stratigraphic equivalent of the deepest formation penetrated on the leased premises or on land pooled therewith, unless this lease is otherwise maintained as to such outside lands or deeper depths as may elsewhere be provided herein.
Shut-In Gas Royalty Clause If at any time or times after the expiration of the primary term this lease is being maintained in force and effect by a shut-in gas well for a period of ninety (90) consecutive days, then Lessee may pay or tender to the credit of Lessor at the address set out herein, a sum (called shut-in royalty) equal to the amount of $20.00 per acre for the land then
held by Lessee under this lease and such payment shall continue this lease in force and effect for a period of one year from commencement of said ninety (90) day period. Upon like tenders or payments annually, on or before the expiration of the last preceding year for which such payment was made, this lease shall continue in force and effect for successive one year periods as to the lands covered by and included in the lease at the time the respective payments
or tenders are made. However, this lease may not be maintained solely by the payment of shut-in royalty after the expiration of the primary term for more than two consecutive years immediately thereafter, or for shorter terms at various intervals not to exceed two years in the aggregate. Should the primary term be extended by the payment of shut-in royalty for two (2) years past the primary term, this lease will terminate and Lessee
shall immediately file a Release of record in the Office of the County Clerk/Registrar of Deeds in County, Oklahoma, and furnish Lessor a recorded copy of said Release.
Shut-In Gas Clause Lessee shall pay or tender a royalty of Five Dollars ($5.00) per year per net royalty acre per well retained hereunder, such payment or tender to be made, on or before the later of ninety (90) days following the date of shut in or the anniversary date of this lease during the period such well is shut in, to the Lessor. When such payment or tender is made it will be considered that gas is being produced within the meaning of the entire lease.
Delay Rentals If drilling operations or mining operations are not commenced on the leased premises on or before one year from this date, this lease shall then terminate as to both parties unless Lessee on or before the expiration of said period shall pay or tender to Lessor, or to the credit of Lessor in bank at or any successor bank, the sum of dollars ($ ), hereinafter called rental
which shall extend for twelve months the time within which drilling operations or mining operations may be commended. Thereafter, annually, in like manner and upon like payments or tenders the commencement of drilling operations or mining operations may be further deferred for twelve months each during the primary term. Payment or tender of rental may be made by check or draft of Lessee delivered or mailed to the authorized depository bank or Lessor (at address last
known to Lessee) on or before such date for payment, and the payment or tender will be deemed made when the check or draft is so delivered or mailed. If said named or successor bank (or any other bank which may, as hereinafter provided have been designated as depository) should fail or liquidate or for any reason refuse or fail to accept rental, Lessee shall not be held in default for failure to make such payment or tender until thirty days after Lessor shall deliver to Lessee a
proper recordable instrument naming another bank to receive such payments or tenders. He above named bank or any other bank which may be designated as depository shall be Lessor s agent. Drilling operations or mining operations shall be deemed to be commended which the first materials is placed on the leased premises or when the first work, other than surveying or staking the location, is done thereon which is necessary for such operations.
No Deduction Clause It is agreed between the Lessor and Lessee that, notwithstanding any language herein to the contrary, all oil, gas or other proceeds accruing to the Lessor under this lease or by state law shall be without deduction for the cost of producing, gathering, storing, separating, treating, dehydrating, compressing, processing, transporting, and marketing the oil, gas and other products
produced hereunder to transform the product into marketable form; however, any such costs which result in enhancing the value of the marketable oil, gas or other products to receive a better price may be deducted from Lessor s share of production so long as they are based on Lessee s actual cost of such enhancements. However, in no event shall Lessor receive a price that is less than, or more than, the price received by Lessee.
Warranty Clause This lease is made by Lessor without warranty of title, either express or implied, except as to conveyance or encumbrances by, through, or under Lessor, but not otherwise. Lessor agrees that Lessee shall have the right at any time to redeem for Lessor by payment any mortgages, taxes, or other liens on the above-
described lands, in the event of default of payment by Lessor, and be subrogated to the rights of the holder thereof.
Eric R. King One Leadership Square, 15th Floor 211 N. Robinson Ave. Oklahoma City, OK 73102 (405) 235-5518