On the OTC, it shows for November 2931 barrels & 13,500 MCT. The payment ledger shows the same crude amount, but 10695 MCT @1.76 and 1398 at a higher rate ($15.75) for a total volume of 12,094. Why would this be different?
Gas numbers are back calculated so the stub and the OTC will often not match exactly. Look for the trend, not an exact match.
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The 1398 number is natural gas liquids, a/k/a condensate. It is sold by the gallon, not by the barrel like oil. OTC only shows oil & natural gas. OTC lumps condensate with natural gas because it is a byproduct of nat gas.
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On our 1st Waterloo 1305 check deductions were withheld. Our lease has the no deduction clause. All our leases have no deductions and this is the first time someone has withheld them. Red Bluff is closed for answers till next Tuesday. Anyone else have this problem?
I have always had this problem. Send a registered letter with return receipt requesting deductions be refunded and not used in the future. I also include and reference a copy of the filed lease with County Clerk stamps with NO DEDUCTION clause highlighted. Seems they subtract deductions unless you call attention to the lease. Guess I have gotten use to it — sad … however, these wells are usually 2 sections and have hundreds of owners to send DO and payments, and looks like they are cutting corners if it helps reduce their expenses.
Many of the accounting software packages are set with default settings to take deductions since so many folks don’t actually read the leases but just sign them. They can be overridden for individuals with no deductions leases. Do take a look at your lease and make sure that there is not a little “however” clause in the second half of the “no deductions” paragraph. Very frequently, there is and that puts the deductions right back in.
There it is.; however Lessor’s shareof any such costs which result in enhancing marketable oil, gas, or other products to receive a better price may be deducted from Lessor’s share so long as they are based on Lessee’s actual cost of such enhancements. IS THIS DEDUCTIBLE HOWEVER? I’m trying to save whatever I can.
That is the sentence that allows the deductions from your checks. As to whether you can deduct those charges on your income tax, that is a question for the accountants.
I’m not an accountant and don’t play one on TV, LOL. But, having done my own taxes for years, there are 2 ways to do them. You can show gross revenues and deduct those charges or you can show net with no deductions. Either way, you only pay taxes on what you were paid, period. Consult with your accountant but I’m quit sure of these 2 choices.
Because of the way the depletion deduction is calculated, it is important to report GROSS revenues (line 4 Schedule E), and then enumerate your other expenses and deductions. The depletion deduction is based on line 4, and you want line 4 to be as large as possible. If you simply report your NET revenues on line 4, you are shorting yourself on your income taxes by not taking the full amount of the allowed depletion deduction. Figure your taxes both ways and you will see different results. Also, if you report NET revenues on line 4 rather than the GROSS revenues from your 1099, you are opening yourself up to questioning from the IRS. Also, a few small companies make it difficult by ONLY giving you the GROSS amount and omitting the NET. Even if you have to determine deductions from your monthly statements, do it.
Well I have learned something from this subject. Always reread your lease even if you told the landman you wanted no deductions and he agreed. You see the paragraph titled NO DEDUCTIONS and are new to this game and trust the landman and oil company to give you what you have asked for but always get an oil and gas attorney to check it “HOWEVER”. Do your taxes from gross not net and expenditures can be deducted. These minerals were leased 3 years ago but well has been drilled so we are stuck with it. We will probably be dead before we release but I will write this down for the kids. Thank you everyone for your input and help.
I have found they NEVER provide for No Deductions in a lease. I have ALWAYS had to provide them my Exhibit A ( which I provide ) and have them reference the Exhibit A in the lease ( this can be hand-written in -
as Exhibit A attached
). Also this is an opportunity to add many other clauses for your benefit - no extensions - a short shut-in clause - no warranty - in addition to the all important NO deductions and several other important considerations. It’s the WILD WEST in the oil business and it seems to be getting worst rather than better - think the drop in price has caused them to squeeze us owners - even more than before. O yes, even if you have included considerations such as No Deductions one generally has to send registered letters to the company to get those clauses you have added enforced. I guess most people go with the provided lease or don’t bother to follow up – O course the OCC doesn’t seem bothered by such practices - so they might as well try to take advantage of us –
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