In general i it “Ok” to borrow language from a lease form that has been filed of public record? I ran across an OGL lease form where a university was the lessor. They have some awesome language like Free Royalty clauses, Pugh clauses, etc. Awesome lessor favorable stuff. I am wondering if I can just copy/paste to include in my Exhibit A? Many thanks!
I am not a fan of taking good clauses and trying to overwrite a bad lease form by attaching an addendum. You almost invariably end up with two documents that conflict with each other, and even if you say the exhibit controls, it is extremely hard to fix everything in a bad lease. What happens is you end up with a vague document. For example, a bad shut in clause would pay $1/acre and allow them to shut both oil and gas wells. A good shut in clause may require $50/acre and only apply to gas wells. Does this mean oil wells are still under the $1/acre provision? You can try to fix all these things in your exhibit, but it usually ends up being a litigators nightmare (or dream depending on perspective), where you have an issue come up and the intent of the two forms, after you read them together, is vague. If it is vague, a jury gets to decide, and you get the privilege of paying for a full blown jury trial.
A recent Texas Court of Appeals case called one of the leases “Frankenstein’s Monster”, which can be pretty accurate.
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Thank you for your input I value your advice, I was however just looking for a straight-up answer to my question.
Then, yes you can cut and paste. It may cause a lot of problems.
I have a simple test for this sort of thing. Would you “borrow” language you found in other courthouse documents when buying or selling your house?
Perhaps an entire document. I have seen way more OGLs than I ever have house selling stuff. The idea I had was to strike entire paragraphs of a operator/oil co OGL and allow my language to stand in… So strike a royalty clause and use say University of Texas lease form royalty clause which includes language such as: “Lessor and Lessee agree that the foregoing provision is given full effect, is not to be construed as “surplusage,” and that the court’s holding in Heritage Resources,Inc. v. Nationsbank, 939 S.W.2d 118 (Tex. 1996) will have no application to the terms and provisions of this Lease.” But there are a lot of things that appear superfluous like a big paragraph regarding archaeological finds! I was just hunting a couple of good clauses… A strong Pugh for another example. Thank you all.
The State Bar of Texas OIL, GAS & ENERGY RESOURCES LAW section periodically publishes reviews of lawsuits many over the years cover conflicts between the main body of a lease and the addendum.
When it comes down to it, and there is a lawsuit over the lease terms, the courts seek to ascertain the intent of the parties from the language contained in the four corners of the instrument. It examines the entire instrument as a whole rather than applying mechanical rules of construction which may offer certainty, but at the expense of determining intent.
One appellate judge was exasperated with the conflicts between lease bodies and addendums. He compared the cut and paste artwork his kids did it when they were really young. They thought it looked great. They now look at their scrapbooks and think not so much.
Will the Pugh clause be vertical or horizontal? A Pugh Clause does NOT release lease lands if lease lands are not pooled with other adjacent land. If vertical, what measurement of depth do you want to use? “from the surface down to 100 feet below the stratigraphic equivalent of the deepest hydrocarbon interval (as measured by electrical logs) perforated for production and producing in paying quantities in and under…… of some other description? Which applies to your mineral interest?
But nothing wrong with cutting and pasting. Attorneys do it all the time but, they have insurance to cover their errors.
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