Series 22: Lease Agreement

Lease Agreement

Land is composed of two separate ownership interests: the surface of the land itself and the mineral rights underground. A program sponsor will sign a lease agreement with a property owner to acquire the rights to both the surface of the land and the mineral rights. A signature bonus will compensate the property owner for leasing the surface of the land, which will be paid up-front upon signing the lease. The landowner’s compensation for leasing the mineral rights will be to receive an underlying royalty interest. The royalty interest is typically 12.5% of the production revenue before expenses. The lease will designate a term (usually three years) in which the sponsor acquires the right to