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Simple English definitions for legal terms
term interest
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A quick definition of term interest:
Term interest: In the oil and gas industry, a term interest refers to a type of mineral or royalty interest that is not permanent. This means that it has an expiration date or can be terminated under certain conditions. A term interest can be for a specific period of time, such as 25 years, or it can be defeasible, meaning it lasts for 25 years and continues as long as there is production from the property.
A more thorough explanation:
A term interest in the oil and gas industry refers to a mineral or royalty interest that is not permanent. This means that it has a specific duration or time limit. It can be for a fixed term, such as 25 years, or it can be defeasible, which means it lasts for 25 years and as long as there is production from the premises.
For example, if a landowner grants a 25-year term interest to an oil and gas company, the company has the right to explore and extract oil and gas from the land for 25 years. After that time, the interest expires, and the landowner regains full control of the property.
Another example is if a landowner grants a defeasible term interest to an oil and gas company. The company has the right to explore and extract oil and gas from the land for 25 years, but if there is still production from the premises after that time, the interest continues for as long as there is production.
These examples illustrate how a term interest is a limited right to explore and extract oil and gas from a property. It is not a permanent interest, and it has a specific duration or time limit.