Hello Hive Mind,
Here is the clause I’m trying to get, followed by the one they are saying says the same thing. Pretty sure they are very different, but looking for some third party insight to help me counter their version.
*THIS IS THE NO DEDUCTIONS/GROSS ROYALTY CLAUSE I WANT IN THE LEASE:
This is basically a copy of the Gross Royalty mineral rights clause that was held up in Texas court in; BlueStone Natural Resources II, LLC v. Randle, No. 19-0495
Gross Royalty/No Deductions Clause
“LESSEE AGREES THAT all royalties accruing under this Lease shall be without deduction, directly or indirectly, for the cost of producing, gathering, storing, separating, treating, dehydrating, compressing, processing, transporting, and otherwise making the oil (including but not limited to distillate and condensate), gas (including but not limited to casinghead or coalbed methane gas and helium and all other constituents), hereunder ready for sale or use. Lessee agrees to compute and pay royalties on the gross value received as both a valuation method and a valuation point, including any reimbursements for severance taxes and production related costs.”
royalty received by lessor be based the price received by Lessee ( oil & gas company) from a NON-AFFILIATED THIRD PARTY SALE.
*THIS IS THEIR’S THAT THEY SAY, SAYS THE SAME THING:
NO DEDUCTIONS: It is agreed between Lessor and Lessee that, notwithstanding any language to the contrary, all oil, gas or other proceeds accruing to the Lessor under this lease or by state law shall be without deduction, for the cost of producing, gathering, storing, separating, treating, dehydrating, compressing, processing, transporting, and marketing the oil, gas and other products produced hereunder to transform the product into marketable form; however, Lessor’s share of any such costs which result in enhancing the value of marketable oil, gas or other products to receive a better price may be deducted from Lessor’s share of production so long as they are based on Lessee’s actual cost of such enhancements. However, in no event shall Lessor receive a price that is less than, or more than, the price received by Lessee. In the event that Lessee enters into a contract with any subsidiary or affiliate covering the sale of said products, then Lessor shall receive the same price that said subsidiary or affiliate receives.
-“Notwithstanding any language to the contrary,” negates everything that is stated, correct? -then the however part adds all deductions right back in anyway -and I asked for unaffiliated 3rd party, and they selected an affiliated 3rd party or subsidiary
Thoughts?