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Permalink Reply by Skip Peel - Mineral Consultant on October 5, 2010 at 2:36

In terms of the current development activity involving the shales, a partial assignment likely applies to a division of drilling rights for depths/formations. The Chesapeake/Indigo Minerals working agreement is a good example. Indigo retained the "shallow" rights on their leasehold for their own development plans and assigned the "deep" rights to Chesapeake. An even more common scenario is where a small operator of shallow wells assigns their deep rights to an operator that drills shale wells. In this case the deep rights assigned are held by the existing shallow production and remain so as long as that production exists. It is customary however in this type of assignment for the assignor to require some type of continuous drilling clause in the agreement. The only scenario where drilling rights would go to the property owner would be by termination of the original lease or successful demand-to-develop litigation.

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Permalink Reply by The_Baron on October 5, 2010 at 2:56

In addition to what Skip says above, Partial Assignment is when only part of the interest of a lease is transfered or assigned. a good example is when an Operator has multiple WI partners, the operator assigns the WI a part of each lease in their mutual area of interest.

For example, if you owned a 10% WI in my prospect, I would assign you 10% of each lease in our prospect area.

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