Release of Right of First Refusal Template
(Upstream Oil & Gas Lease)

Summary

This template releases a right of first refusal and removes a cloud on the title of a piece of property within the upstream oil and gas context. It acts as a curative document, lifting restrictions placed on an owner's ability to sell or transfer a mineral interest. This template contains practical guidance and drafting notes. A right of first refusal is an agreement that gives the party holding such right the ability to make a bid, proposal, or offer—often on favorable terms—before any other party has the right to do so. Within the upstream oil and gas industry a mineral interest owner often grants a right of first refusal to a third party, allowing that party the chance to purchase the mineral interests in question before any other party is given the opportunity to make an offer. Such agreement is often made at a price favorable to the party holding the right of first refusal. Within the energy industry more generally, rights of first refusal are used by joint venture partners to protect themselves in case one or several of the other partners want to sell their interest(s). In that situation, the right of first refusal allows one joint venture partner to purchase the selling partner's interest and step into the selling partner's place. A right of first refusal may also be used by mineral interest owners to grant preferential rights to upstream or midstream energy companies. Regardless of how they are used or who they are granted to, rights of first refusal are restrictive and place a future and ongoing burden on the property at issue. A release of such right is valuable to the property or interest holder subject to the right of first refusal. Because a right of first refusal is recorded in the property records as a restriction on the property at issue, a release of such right is also recorded to alert any interested party the restriction has been removed. For more information on how rights of first refusal operate, how they are enforced, and how they are waived or released, see Commercial Agreement Rights of First Refusal, First Offer, and First Negotiation. For a discussion of how rights of first refusal are used to protect joint venture partners in a transaction, see Key Provisions in Joint Venture Agreements.