Market Enhancement Clause

 

I am new to this leasing poker game and am trying my best to become as knowledgeable as possible before I sign. Can anyone help me understand this Market Enhancement Clause which I find know in these leases.  I get the net verses gross idea, but is the market enhancement a new way around this.  Is this good or bad for the landowner?  I would appreciate any help with this issue.  Thanks.

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Permalink Reply by Marc on May 25, 2011 at 12:49pm
I've heard it both ways.  First, a knowledgable seeming person told me that the market enhancement clause buried at the end of a lease agreement NEGATES a gross royalty provision that appears on the first page.  Then, another knowledable person said the market enhancement clause ENSURES a gross royalty.  I haven't taken a look at the language yet and it'll probably only throw me off the scent.  But it's something I'd like to have clarified.
Permalink Reply by Bruce McCrea on May 25, 2011 at 2:57pm
Marc, thanks for the reply on market enhancements. This clause really scares me and I do want to dig deeper into the facts. Thanks again.

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