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In the last decade, many oil and gas lawyers have learned more than they wish to know about the Uniform Commercial Code (U.C.C.). Like it or not, Article 2 of the U.C.C. governs most contracts for the sale of natural gas. Section 2-107(1) draws a distinct line between leases, deeds, and other conveyances of minerals in place, on the one hand, and the sale of the minerals by the miner or producer after the minerals have been severed, on the other. The consequence of this rule is that Article 2 has little or nothing to say about the sale of oil and gas rights from one owner to another or about the form or interpretation of a lease to produce oil and gas, but it has everything to say about a contract between a pipeline or some other purchaser and the lessee or other producer who will drill for and produce the gas.


Reprinted from Southwestern Legal Foundation Proceedings of the Forty-Seventh Annual Institute, Annual Institute on Oil and Gas Law and Taxation, with permission. Copyright 1996 Matthew Bender & Company, Inc., a LexisNexis company. All rights reserved.