What is the signing procedure

Could someone explain the "usual" signing procedure when leasing your land to an oil and gas company. Specifically, I am curious about something called a "letter of intent". Is this something you sign at the beginning before the title search to bind the landowner to the terms? I hear so many times that the oil and gas company backed out of an agreement. Is this letter of intent binding on you, the land owner and not the company? Is it usually/always done this way? I understand the need for a lawyer, but I just thought someone might have some experience with this.

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Permalink Reply by Kenny on August 5, 2012 at 4:50am

Geraldine

Typically, a Letter of Intent or "LOI" is used by an individual or company that is trying to market or flip your lease.  It is a way for them to tie the property up while they shop for buyers.  Any legit operator (not that these other companies aren't legit, they just don't have the funds to drill so they make their money off of the lease) will give you a lease to sign when you are ready, instead of a LOI.

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