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An oil and gas lease is a contract between the mineral rights owner and an oil and gas company. On the other hand, a deed is a transfer of ownership of real property.
Oil and gas leases and deeds are the legal agreements between mineral rights owners and oil and gas companies. These leases give the oil and gas company the right to explore, develop, and produce oil and gas on the leased land. There are different types of land deeds, each with its own benefits. The most common types of deeds are:
General Warranty Deed
A general warranty deed guarantees that the title transfers the property plus any interest and is clear of any liens or encumbrances.
The most common oil and gas deed type is the general warranty deed. This type of deed gives the owner a warranty from the mineral rights owner that the land is free of encumbrances. This guarantee can give an owner peace of mind. The drawback of this type of lease is that it can be expensive and time-consuming to obtain.
Special Warranty Deed
A special warranty deed also covers title defects, whereas a general warranty deed does not.
This type of lease provides more specifics and perhaps fewer guarantees. This type of deed can be less expensive than a general warranty deed, but it still provides some protection for the mineral rights owner.
Quitclaim Deed
A quitclaim deed is typically used to clear up any questions or doubts about the ownership of the property.
This deed essentially "quits" the grantor's rights and claims to the property and transfers all interest in the land from the new owner. The drawback of this type of deed is that the new owner may not have a clear title to the land if there are any encumbrances.
Gift Deed
A gift deed is used when the owner wants to give the property to someone else without receiving anything in return.
This deed is used when the current owner wants to give the land without compensation. The drawback of this type of deed is that the giftee may not have a clear title to the land if there are any encumbrances.
Other Types of Oil & Gas Agreements
Joint Operations Agreement (JOA): An oil and gas joint operating agreement is a contract between two or more oil and gas companies who agree to share the costs, risks, and rewards of oil and gas exploration and production.
Royalty Agreement: A royalty agreement is a contract between an oil and gas company and a landowner in which the landowner agrees to give the oil and gas company the right to explore, develop, and produce oil and gas on their land in exchange for a percentage of the royalties.
Farmout Agreement: A farmout agreement is a contract between an oil and gas company and another oil and gas company in which the first agrees to give the second the right to explore, develop, and produce oil and gas on their land in exchange for a percentage of the profits.
Pipeline Easement: A pipeline easement is a contract between an oil and gas company and a landowner. The landowner agrees to allow the oil and gas company to build a pipeline on their land.
Surface Use Agreement: A surface use agreement is a contract between an oil and gas company and a landowner in which the landowner agrees to allow the oil and gas company to use their land for oil and gas exploration and production activities.
Which type of oil and gas deed you're interested in or handling will depend on your individual circumstances. Deeds including oil and gas production can be a complex legal matter. It is important to consult with an experienced oil and gas attorney at The Stuart Firm before entering into any lease agreement.