I am a mineral owner. Can anyone tell me the meaning and significance in a lease agreement of the words "lessor's interest to bear 1/4 of the costs of treating oil to render it marketable pipe line oil"? From what I have seen of leases this seems to be a common inclusion.
Ronnie - I got stuck with this on the one producing well that we now have. this allows the producing company, in our case - Shell, to charge the royalty owners the producing and delivery costs of the well/wells. I have since negotiated this out of our contracts.
Good luck with that
Tommy Beauchamp
Thanks, Tommy
In the TCU Energy Institute seminar for royalty owners is was "highly recommended" to use the following sentence in your lease:
"Lessee shall pay all royalty on the gross proceeds of the marketable product which is the price received by the Lessee at the point of sale with an arms length transaction without any post production costs".
Also, ALWAYS check the language in the division order. This is where the operator can legally change the lease and put in post production costs if the lease had called for no post production costs.
Mike
Thanks, Mike. That is helpful.
Mike Miller said:
In the TCU Energy Institute seminar for royalty owners is was "highly recommended" to use the following sentence in your lease:
"Lessee shall pay all royalty on the gross proceeds of the marketable product which is the price received by the Lessee at the point of sale with an arms length transaction without any post production costs".
Also, ALWAYS check the language in the division order. This is where the operator can legally change the lease and put in post production costs if the lease had called for no post production costs.
Mike