"Paid Up" Lease

A gas company is asking me to sign a lease titled:

"Oil and Gas Lease (PAID UP)"

What does the term "PAID UP" mean and why would the gas company want this term in a lease?

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Permalink Reply by DESJR on February 4, 2016 at 1:37pm

it means the lease is paid in full for the full initial primary term of the lease.

Permalink Reply by Marcus Huey on February 4, 2016 at 2:11pm

Thank you!

Permalink Reply by Barry D on February 4, 2016 at 1:58pm

Marcus,

This is a general example:

In the past a lease might state for a term of 10 years, and then have a clause that stated that if a well wasn't begun within one year the Lessee (o&g company) would have to pay a delayed rental per ( each lease was different) but let's say it was a delayed rental of "X" dollars per year. This kept the lease in force for the full term of 10 years.

The newer leases are "Paid Up" that delayed rental is paid up front.

I suppose the companies like this because it makes accounting easier. The company doesn't have to keep track of 100's of leases to make sure when and payments are due and how much to pay.

Hope this helps.

Permalink Reply by Marcus Huey on February 4, 2016 at 2:11pm

Ah, makes sense!  Thanks so much!!!

0ym9x5ag7ury2Permalink Reply by 0ym9x5ag7ury2 on February 9, 2016 at 10:42am

Signing an O&G companies lease is a big mistake.

Everyone who has done it understands why. Protection & Benefits for the company, Nothing but heart burn for the landowner.

I thought we were past this mistake.

Permalink Reply by Marcus Huey on February 9, 2016 at 12:07pm

I signed several years ago...2010...huge mistake...never again without an attorney.

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