Preferential right provisions and their applicability to oil and gas instruments

Journal Article · Sun Dec 31 23:00:00 EST 1978 · Public Land Resour. Law Dig.; (United States)

OSTI ID:5537225

Abright, H

An important, yet often overlooked, provision commonly included in oil and gas instruments, particularly joint operating agreements, farm-out agreements, and unit operating agreements, is one providing for a preferential right to purchase. Known also as a right of first refusal, a preemptive right, or a conditional or contingent right, these clauses provide that when the owner of an interest burdened with such right desires to sell the property, the holder of the right must be given the first opportunity to buy on the terms provided in the agreement. This Comment deals with the following three major areas of concern which have arisen in connection thereto: (1) the question of the basic validity or enforceability of a preferential right provision; (2) the application of valid provisions to various transactions; and (3) the obligations concurrent with a preferential right, and the remedies and defenses relating to a breach thereof. The Comment concludes with a checklist of considerations necessary to the drafting of valid and practical preferential right provisions. An appendix follows with a sample provision drafted with these considerations in mind.

• OSTI ID: 5537225
• Journal Information: Public Land Resour. Law Dig.; (United States), Journal Name: Public Land Resour. Law Dig.; (United States) Vol. 16:1; ISSN PRLDD
• Country of Publication: United States
• Language: English

Related Subjects

02 PETROLEUM
021000* -- Petroleum-- Legislation & Regulations
03 NATURAL GAS
031000 -- Natural Gas-- Legislation & Regulations
29 ENERGY PLANNING, POLICY, AND ECONOMY
294002 -- Energy Planning & Policy-- Petroleum
294003 -- Energy Planning & Policy-- Natural Gas
AGREEMENTS
CONTRACTS
ENFORCEMENT
EQUIPMENT
GEOLOGIC DEPOSITS
JOINT VENTURES
LEGAL ASPECTS
NATURAL GAS DEPOSITS
OWNERSHIP
PETROLEUM DEPOSITS
RESOURCES