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Simple English definitions for legal terms
delay rental
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A quick definition of delay rental:
Delay rental: A payment made by the person who leases land for oil and gas exploration to the landowner to keep the lease active without having to drill for oil or gas during a certain period of time. This payment is made during the primary term of the lease and is meant to maintain the lease until drilling can begin.
A more thorough explanation:
Definition: Delay rental is a payment made by the lessee to the lessor in the oil and gas industry to maintain the mineral lease from period to period during the primary term without an obligation to drill.
For example, if a company leases a piece of land for oil and gas exploration, they may be required to make a delay rental payment to the landowner to keep the lease active even if they are not actively drilling on the land.
Delay rental is a way for companies to hold onto mineral leases without the pressure of drilling immediately. It allows them to maintain the lease and explore their options without the risk of losing the lease to another company.