Deduction from Royalty Check ~about (15%) ~ Gathering??? Andarko!!

 

I am wondering if anyone who is receiving a royalty check from Andarko and they are taking out gathering costs ~ about (15% )even if you have an addendum to their lease titled Market Enhancement states. 

  (Statoil is not taking this cost out) of check 

It is agreed between lessor and lesee that notwithstanding any language herein to the contrary, all oil ,gas or other proceeds accuring to the lessor under this leaseor by state law shall be without deduction, directly or indirectly,for the cost ofproducing gathering,storing,seperating,treating,dehydrating,compressing,

transporting, and marketing

the oil ,gas products producedhereunder totransform the product into marketable form:  however,any such costs which result in enhancing the value of the marketable oil,gas or other products to receive a better pricemay be deducted from lessors share of production so long as

they are based on lesse's actual cost of enhancement.  However,in no event shall lessor receive a price that is les, than the price received by lessee. 

 

Statoil is not taking out gathering deductions

 

sharon

please email me at marecllusshale or sharonfarmhouse@hotmail.com

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Permalink Reply by Ben Elmore on August 3, 2011 at 3:55am
Companies are starting to insert this language into leases, and some are using the "enhancement" portion to do an end run around the cost-free portion (e.g., processing the gas enhances the value so you are charged with your share; or gathering arguably enhances the value because it cannot actually be sold at the mouth of the well).  Not saying Anadarko is doing this, but other companies are and IMO it is improper.

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