Tag Archives: contracts
Oil and Gas Leasing
We may not think much about it because generally they are both under the same category as mineral rights leasing. But oil and gas leasing are actually different from each other.
The first obvious difference would be concerning their forms. Gas, unlike oil which is liquid, is first processed from its gaseous state and liquefied for transport. For the transport a network of pipelines is used. The liquefied gas is transported from its well and passed through a natural gas pipeline. This is because gas is not always used in the area where it is found. A network of pipelines had to be made as a means of transport.
Natural gas can either be intrastate or interstate. It is called intrastate gas if it is produced and consumed in the same state. If it has to be transported from one state to another then it is considered as interstate gas. Interstate gas is federally regulated.
For oil or crude oil, local refineries are often used. So there is not much of a transport issue when it comes to oil production, consumption, and leasing.
The different means of transport for oil and gas would create a significant difference in oil and gas leasing. Transporting gas along the pipeline means a more solid capital investment. The price and demand for gas is also influenced by the season and need for natural gas. This makes gas leasing much harder to regulate and measure than oil leasing.
The gas sales contract is also a factor in gas leasing. The price of gas was first regulated by the federal government. During this time, gas contracts were held with long-term commitments and the contracts could last as long as ten to twenty years. As time went by, the contracts became much shorter in duration, due mainly to the deregulation of the gas prices. Oil leasing, on the other hand, do not suffer the strains that gas leasing has to undergo since it has never had the same regulations as gas. The transport of oil to local and regional refineries also did not prove as troublesome as the transport of gas did.
Regarding royalties, it is easier to to offer royalty with oil leasing. Oil royalties can be paid in either oil or cash. The owner of the land can opt to receive oil from the oil company and market it himself. Most owners, though, still go for oil royalties in cash at the posted price of the oil.
This is not so for gas royalties. Gas royalties are usually paid in cash. This is because gas is more difficult to offer a royalty due to its gas-to-liquefied state. Its volatility makes cash the best option for landowners.
The price of gas is also difficult to give a solid value to because of the fluctuating markets for gas. Many landowners would go for gas royalty in market value, and ensure that the gas royalties are paid in cash.
Despite their differences, oil and gas leasing terms for the royalties can be negotiated in a similar way. Land owners can specify separate royalties for oil and gas production, and they can put in a due date for the receipt of royalty payments. They can also put in an interest charge for late payments.
Equipment Lease In Australia
There are many choices in commercial equipment finance in Australia. A preference today can be to enter an equipment lease contract. A Car lease and equipment leasing are more or less similar to each other. If the business survives and flourishes, the company will always have the option of buying the equipment once they are done with the loan. However, there are certain basic points that one must always keep in mind while entering equipment lease contracts.
When it comes to equipment leasing, your responsibilities will be a lot more than the leaser, whose responsibilities end with his just signing the contract. You must make sure that you will successfully be able to fulfill all your responsibilities, as from then on, you will have to do almost everything starting from taking good care of the equipment, paying the lease contract every month, and even the insurance and rental fees on certain occasions.
If you are a company the directors might also be required to be guarantor when it comes to the equipment lease contract. This is done by the leasing companies in order to ensure the safety of the equipment being leased out. In case any damage is done to the equipment or the loan is not repaid, the guarantor will also be answerable to them in that case.
As long as you are in charge of the machinery, expenses will not at all be incurred on the part of the real owner. That is why equipment lease contracts are also called triple-net contracts, since the consumer has to undertake the responsibilities of equipment maintenance, liability and casualty insurances and the payment of taxes associated to it.
When the hell-or-high water clause is present on the lease contract, it means the consumer is bound to pay the rent as long as the lease lasts, irrespective of any kind of external event that affects either the equipment or the contract itself. If there are any claims to be made against the leasing company, it is regarded as something for which legal steps need to be taken separately.
Once the equipment lease contracts end, normally the lease agreement asks to buy the equipment at the residual One can also renew the contract. However, establishment fees can be charged and is subject to the lenders approval.