Re: Gross or Net Royalties
Gross royalties are paid before deductions are taken
example : Gas/Oil company receives $100 & you get 20% Gross royalty - you get $20 payment
Net royalties are paid after deductions are taken
example: Gas/Oil company receives $100 deductions are cost of setting up whole shebang and transporting product $40
Net is $60 - your share of 20% Net royalties $12
So, a $20 payment to you is better than a $12 payment to you
Hope this helps!
There is something about "gross proceeds at the wellhead" or some such language that they can use to say that they can charge post production costs because they don't sell at the wellhead. Anybody know more about this?
I can see the confusion companies try to make here. Companies sell gas to either midstream transportation owners or the interstate transmission transportation owners at a meter (there are a few rare exceptions). So Antero has a netowrk of 3 pads with 15 wells. The 15 wells tie into a gathering line and that gathering line runs and connects to EQTs midstream line. Antero has a meter on that line and EQT pays Antero for the gas that enters its midstream line. Now Antero is being paid by a third party midstream owner for the gas. Antero is then using those procedes to pay the royatly owners. Then the rest of course...after taxes is profit. Where they get you is the third party post production costs. Since EQT is a third party that you the royaty owner is obligated to they can technically say the deductions are to support the expense Antero has to support the lines, meters...etc with EQT the third party. So yes, proceeds are not paid at the wellhead...they are paid at the meter into a line that the company no longer owns or maintains. I hope this helps.