My lease stats that there is no deductions other than severance taxes. I recently saw deductions for an Oilfield Clean Up Fee. Is this allowed or considered a severance tax?
Longhorn,
In my opinion, if this weird fee is not in your lease agreement you need to inform this operator that you will contest this fee in court with "your legal expenses" included!! "They" foul the earth that you own, "They will pay "reparations" for these damages to "YOU".Probably a fee charged by the State. This $$ goes into a fund used to clean up old wells when the owners can’t be found. See if that is not a fee deducted for the State.
This is an assessment fee charged by State of Texas of $0.00625 per barrel and $0.000667 per mcf. It is not optional or negotiable. The tax goes directly into a fund for the State / RRC to pay to plug abandoned wells whose operators have gone bankrupt or otherwise disappeared. In the last 2 years, the RRC plugged over 3,000 abandoned wells. These are 6,000 wells currently on the list to be plugged. However, there are 130,000 inactive wells, many of which have operators which have long since disappeared. Unfortunately, the RRC allows operators to leave inactive wells unplugged for decades rather than making them plug on a regular basis. Then operators go under or die, leaving wells unplugged and the cost of the State, meaning the residents and taxpayers. If you look at the inactive list, some have not operated for over 20 years and many of the listed operators are no longer licensed. Some oil companies list the regulatory fee separately and others include it in the severance tax charge. All royalty owners pay the fee.
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If your interest is in Oklahoma it’s probably your “voluntary” contribution to the Oklahoma Energy Resources Board for cleaning up old abandoned well sites. It’s voluntary because you can request a refund but it’s such a small amount that hardly anybody does.
Oh, sorry, now I see that your interest is in TX. Texas probably has a program similar to OERB.