Oil and Gas Industry: Irs Audit Technique Guide

Number of Pages 152
Type Paperback
Petroleum companies obtain the rights to explore, drill, and produce subsurface minerals by entering into an oil and gas agreement or "lease" with the landowner. An oil and gas lease embodies the legal rights, privileges and duties pertaining to the lessor and lessee. The lessor is the mineral interest owner who transfers the working interest to the lessee who retains a royalty interest. The mineral lease is a very important legal document to the petroleum industry and provides the framework for all the activities that follow. It can be a useful auditing tool, because it provides a description of the property, identifies the royalty owner, and can give details of such items as delay rentals, lease bonus, unitizations, and primary terms. When a joint interest situation is created, the parties involved (i.e., the operator and nonoperators) generally execute an operating agreement. The normal form used for the operating agreement is Aapl Form 601. The joint operating agreement . . .Petroleum companies obtain the rights to explore, drill, and produce subsurface minerals by entering into an oil and gas agreement or "lease" with the landowner. An oil and gas lease embodies the legal rights, privileges and duties pertaining to the lessor and lessee. The lessor is the mineral interest owner who transfers the working interest to the lessee who retains a royalty interest. The mineral lease is a very important legal document to the petroleum industry and provides the framework for all the activities that follow. It can be a useful auditing tool, because it provides a description of the property, identifies the royalty owner, and can give details of such items as delay rentals, lease bonus, unitizations, and primary terms. When a joint interest situation is created, the parties involved (i.e., the operator and nonoperators) generally execute an operating agreement. The normal form used for the operating agreement is Aapl Form 601. The joint operating agreement . . .