A Landman's Guide to Drafting Provisions For the Allocation of Gas Marketing-Related Costs Under the Oil and Gas Lease
Thirty years ago, one writer discussed the case law which had developed in regard to farmout agreements. He observed that a great many of the disputes reflected in the reported cases arose not out of what was written in the farmout agreement, but rather out of what was left unsaid. He concluded that, while the fine print [in certain agreements] may be painful, it's that invisible ink that kills you.1
The same holds true with any contract.2 What is left unstated in an agreement will at times have as great of an impact on the outcome of a given controversy as the words [21-4] that are affirmatively stated in the agreement.3 Thus, contract drafters are presented with an ever-present balancing act. Since it is virtually impossible to draft a contract which addresses in detail every conceivable contingency, the drafting parties must arrive at an appropriate balance between the general and the specific. They must determine the areas where generalized language should suffice, and identify those subjects on which more particular contract provisions are necessary or desirable.
Oil and gas leases are contracts,4 and they are subject to the same types of concerns that arise in the drafting of any agreement.5 The general rules and principles relating to the construction and interpretation of contracts likewise apply to oil and gas leases.6
The respective rights
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