What is an oil and gas lease?

An oil and gas lease is a written agreement in which a mineral owner (the “lessor”) allows another person or company (the “lessee”) to explore for, drill and produce oil or gas on specified lands for a certain period in exchange for the payment or royalties. The lease provides a legal description of the property, the amount of royalty to be paid (typically expressed as a fraction, e.g., 1/8 or one-eighth).