what kind of lease does the state assign to a mineral owner if they are pooled? i have a tract of nearly 400 acres that mach is pooling? they are levering the pooling against a lease and they won’t back up and allow a no deductions clause. would i be better to go for the 21 percent election and no bonus over the 1/5 and 400 dollar bonus? advice please? Thank You
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Are there other oil and gas companies active in your area? Also, have you tried negotiating a 1/5 interest no bonus in your lease including a no deductions clause? And does your lease deduction clause state “no deductions for processing” as well as the standard no deductions?
there are not any other interests at this time. they are offering 1/5 and 400 dollar bonus. i posted the deductions clause above.awaiting moderator approval
It is agreed between the Lessor and Lessee that, notwithstanding any language herein 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 the 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
That is a fake no deduction clause because of the last portion which states:
Many mineral owners ask for a no deduction clause and this is what they get, it is actually a deduction clause.
This post is not legal, tax or investment advice. Reading or responding to this post does not create an attorney/client relationship.
yes sir i agree. i am in a position of being force pooled over this clause. my choices at this time are 1/5 and 400 dollar bonus lease with the above clause that allows deductions or being force pooled. i think the force pool elections may be an 1/8 or 1/5-400 or a 21% no bonus. i am the surface owner so lease provisions are important to me for the surface but i am unclear if a surface use agreement under a force pool election of 21 percent would be a good option for me.
The last sentence is confusing, but we have many leases with the very same no deductions clause and we are not paying for any of the deductions in the clause. It’s because if the lessor pays for the enhancements the lessor will also get the price for the enhanced products.
so?? what this is saying is that if the lessor pays to have the oil and gas enhanced and receives a better price then the lessor and the lessee share in the expense of only the enhancement but not production etc? and without this clause the lessor only will receive all of the revenue of any enhancement?
John, my family has hundreds of leases with this no deduction clause, and we are not paying for any of the deductions listed in the clause. The clause reads exactly like it states and pertains to marketable oil and gas not production oil and gas. However, some believe it is confusing and if you don’t want it in your lease, you can cross out, Lessor’s share of any such costs which result in enhancing the value of the 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 Remember, the lease is negotiable between the lessor and lessee. If you have doubts about any portion of your lease you should contact an Oil and Gas Attorney to review your lease.
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You need a good oil and gas attorney NOW!
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John, it’s up to you whether you want to take the 1/5 and $400. Tom Ward is with MACH and Chesapeake and Marathon are the other companies in your area, but Tom Ward was once one of the owners of Chesapeake. Some are getting 1/5 and $500 in other sections but one section can be different than the next. You can wait for pooling or lease it’s up to you.
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