Oil and Gas Leases: Assignment; Release; Surrender; Termination Net Profits Interest

摘要

Macquarie Bank (Bank) enters into a secured transaction with LexMac and Novus for the funding of oil and gas exploration operations. The collateral consists of specific oil and gas leases owned by LexMac and Novus, which are the subject of their exploration operations. Bradley Knickel owns substantial interests in both LexMac and Novus. Pursuant to the agreement, LexMac and Novus grant a 40% net profits overriding royalty interest from any production of the collateral leases to Macquarie Americas, a subsidiary of the Bank. During operations, LexMac and Novus encounter problems that result in increased costs, and they fail to pay third-party vendors. The Bank ceases all funding of the operations, declares LexMac and Novus to be in default, and begins foreclosure proceedings.