What is the definition of as-extracted collateral?

As-extracted collateral refers to rights associated with natural resources, specifically oil and gas, that have not yet been extracted from the ground. This definition pertains to the rights that a party retains in these resources as they remain in their natural state. When a party has rights in oil and gas before extraction, they have an interest in the underlying property which can be used as collateral for secured transactions.

This definition is foundational in establishing security interests, as lenders may want to secure their loans with the value of the rights to extract these resources. The rights become particularly relevant when they are tied to an agreement that allows for extraction, highlighting the importance of the pre-extraction phase in financing operations in industries related to natural resources.

In contrast, the other options do not accurately describe as-extracted collateral since they focus on different aspects of mineral rights or misinterpret the point of emphasis on the extraction process. For instance, rights in oil and gas after extraction concern the ownership of the product itself rather than the rights tied to the natural resources before they are removed from the land.