Back in the 80’s and 90’s (and earlier but that was before my time) we had oil and gas leases that contained mostly “boilerplate” clauses. People often referred to a standard “Producer’s 88” lease. There were, actually, dozens of variations on the so-called “Producer’s 88”, but the variations were mostly a matter of which boilerplate clauses were or were not included in a particular lease form. These boilerplate clauses were born in the first couple of decades of the 20th century, and they remained basically unchanged for nearly 100 years. You decided which lease form you liked and bought it in tablets of 50 from your preferred forms printer. As you went around to landowners, you tore off a lease, filled in the blanks, and got it signed and notarized. Some landmen (people who go around to landowners to get them to sign leases) carried a typewriter with them, many just filled them in by hand.<\/p>\n
These boilerplate clauses became the subject of decades of court interpretations. Consequently, we had lots of court decisions telling us what these clauses meant and how they were to be interpreted. Court cases also developed what were called “implied covenants” inherent in these boilerplate clauses. There were (and still are) covenants such as the implied covenant to develop the lease, the implied covenant to produce and market oil and\/or gas, the implied covenant to operate as a reasonable and prudent operator. You couldn’t find these obligations by reading the leases; the courts declared them to exist by implication. As a rule, they benefitted the landowners (lessors).<\/p>\n
Then along came word processors. Nobody wanted to fill in forms with a typewriter any more, so lease forms were copied to hard drives and blanks were filled in with the word processor. Over time, people with lease forms on their computers decided to start messing around with the wording. Some of these people were lawyers who generally made changes that legally made sense. Other people were non-lawyers who generally made changes because they didn’t understand the lease in the first place and thought they’d make “improvements”. Non-lawyers generally had little inkling of how their changes might conflict with a century old body of court decisions. <\/p>\n
Lawyers, especially over the last decade or so, have been making changes that specifically emasculate the implied covenants. It’s interesting to see how they come up with wording to eliminate covenants that aren’t contained in the wording of the lease in the first place. They’re not something you can “select” and “delete” on the word processor. You have to come up with language that expressly supersedes something that was there by implication in the first place! <\/p>\n
Landowners have always been at a disadvantage when it came to comprehending oil and gas leases. It’s worse now, as clever lawyers (dare I count myself among them?) generate new lease forms that remove implied covenants – covenants that were favorable to landowners even though they didn’t know it. The “Standard Producer’s 88”? A thing of the past, if it ever existed in the first place.<\/p>\n","protected":false},"excerpt":{"rendered":"
Back in the 80’s and 90’s (and earlier but that was before my time) we had oil and gas leases that contained mostly “boilerplate” clauses. People often referred to a standard “Producer’s 88” lease. There were, actually, dozens of variations … Continue reading