Oil & Gas Leasing Fact Sheet
Understanding Oil & Gas Leasing
Mining companies often do not want to purchase a property that contains gas or oil because they are uncertain about the amount or quality of gas or oil that exists there. As an alternative, they may agree to lease the mineral rights or a portion of those rights from an individual party. A lease is essentially an agreement that gives a mining company the right to enter a property and conduct tests to determine if sufficient minerals exist there. In order to acquire this right, the company pays the owner of the property a certain amount of money at the time the lease is signed. This money "reserves" the property for the company's use for a specific period of time.
When minerals are obtained from a leased property, the landowner is typically paid a share of the income that comes from production. This share is called a "royalty payment." The royalty amount that a landowner receives, and the way in which the royalties are paid, depends upon the lease contract that has been agreed to between the land owner and the mining company. In signing a lease with a company, a landowner must anticipate the activities that the company will engage in when exploring the property, such as drilling and opening excavations. Determining what activities are acceptable is part of a strong lease agreement. If you require further information about oil and gas leasing, contact a Colorado oil and gas lawyer who will be able to answer your questions and provide you with legal advice.
Oil and Gas Attorney in Colorado
At Cantafio & Song PLLC, we provide legal assistance to individuals who require help in matters related to the leasing of oil and gas rights.
Contact a Colorado oil and gas law attorney for help or information regarding the lease of oil and gas rights.
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