Assignment Clause

Typically leases contain a provision permitting both the lessor and the lessee the unrestricted privilege of assigning their rights under the lease. To a large extent these provisions are for the lessee's benefit.

A customary practice in the oil and gas industry is for independent landmen to lease a large area and assign (sell) it to an oil company. Consequently, the ultimate developer-producer may not be the original lessee-negotiator. At times the landowner may find the original lease tract being subdivided among several before-unknown developers. To keep better apprised of such changes, the landowner may seek to incorporate some of the following suggestions.

1. Deny the right of assignment without first securing the landowner's written consent. If this is not feasible, state that any assignment is not binding upon the lessor until he or she is duly notified in writing. The landowner should keep a record of each new assignee for his or her permanent files.
2. Do not release the original lessee from liability for a default on any assigned portion of the lease or leased area. Stipulate that a default on any assigned part of the lease is a default on the whole.
3. Provide that an identification of the governing lease (or assignment thereof) must accompany each payment.