Legal Definitions - oil-and-gas lease

Definition: An oil-and-gas lease is a contract that grants the right to extract oil and gas from a specific piece of land. It is typically considered a determinable fee in the minerals rather than a grant of possession for a term of years.

Example: John owns a piece of land that is believed to have oil and gas reserves. He enters into an oil-and-gas lease with an energy company, granting them the right to explore and extract oil and gas from his land. The lease specifies the amount or value of the minerals extracted and the rent to be paid to John.

Explanation: In this example, John is the rightful possessor of the land and he conveys the right to use and occupy the land to the energy company in exchange for rent. The lease term is based on the amount or value of the minerals extracted, and the written instrument memorializing the conveyance and its covenants is the oil-and-gas lease. The piece of real property so conveyed is John's land, and the contract by which the rightful possessor of personal property conveys the right to use that property in exchange for consideration is not applicable in this example.