Gross at the Wellhead?

One landman asked me, Define Gross?  Just what does Gross at the wellhead mean? Who is standing at the wellhead ready to buy the oil&gas?  If we are gonna get ,say, 20% of the gross sales, just when does this sale take place? What about transporting in a truck or pipeline cost? seperating,compressing,treating,marketing,etc. costs?The actual sale is usually after all these costs. Will it be ,in our case, at Markwest"s plant in Cadiz? or after it"s separated & sent to Texas, the Gulfcoast? Why even say "gross" or "net".? say 20% of the sale price.  Check your lease,those now getting royalty checks are finding alot of these costs are being deducted! taking up to 38% off the royalty check! They call it "enhancing the product", making it marketable. Some of the leases signed in 2010 may have wording inserted to allow for this. Too late now, but those who have'nt signed yet,you may need this info!  If this post gets deleted, I'll know who really runs this site. I"m sure the O&G co.s and their landmen are all watching,learning what us landowners think,what we know. should be plenty of lawyers too!

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Permalink Reply by JK on December 7, 2012 at 9:11am

bo,

If there's one thing we've all learned on this site about lease language is in hiring an attorney who knows ALL about ALL of the protection clauses we need in new leases!

It seems the only time drillers have to pay correctly is when there's a class action suit against them!

Then they do the same thing all over again.

Then they get caught, again, and have to pay, again.

Permalink Reply by Jim Litwinowicz on December 7, 2012 at 9:21am

"If this post gets deleted, I'll know who really runs this site."

 

Thats a pretty accusatory statement. I don't know of any posts being deleted by the site admin unless they were in violation of rules of decorum like vulgarity or personal attacks. If you know of any please inform me.  If you don't, then you owe Keith and his staff an apology.

Permalink Reply by George Mac Pherson on December 7, 2012 at 11:22am

Well Said Jim Well Said

Permalink Reply by bo boboski on December 7, 2012 at 11:31am

Apologizing for any "accusations " taken. Hopefully this is a site run by landowners, For landowners. What we learn here will help us deal with the oil companies & landmen much better,protecting our rights and our land through knowledge gained here. I feel sorry for the ones who signed years ago without benefit of a GMS.

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