What is the most common type of oil and gas exploration agreement?

The most common type of oil and gas exploration agreement is a lease. In North Carolina, a lease is a contract between a mineral rights holder (or lessor) and an oil and gas exploration company (or lessee). The lease grants the lessee exclusive access to a certain area of land for the purpose of exploring for oil and/or gas. During the period of the lease, the lessee has the right to access the area and conduct geological surveys, take samples, build structures, and, ultimately, drill for oil and gas. In exchange for the right to explore the land, the lessee may be required to pay the lessor a set fee (or royalty), or a certain portion of the income generated from producing wells. The majority of leases also include an initial bonus payment, often in the form of cash or other valuable property, to the mineral rights owner. Most leases also include terms defining the maximum amount of time the lessee has to explore for oil and gas, and the circumstances under which the lessee must stop its operations. Numerous other legal considerations may be included in an oil and gas exploration agreement, such as environmental guarantees and indemnifications, operating standards, and dispute resolution provisions.

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What is the most common type of oil and gas exploration agreement?

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