Market Enhancement Clause

I have recently been offered a lease with a "Market Enhancement Clause" on the gas royalty.  Are any of you familiar with this clause?  If so, I would like a little more information about it.  The gas company made it a little confusing to me when they explained it.  IT sounds kind of fishy to me.

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Permalink Reply by Garfield on August 19, 2013 at 5:18am

Do NOT sign a lease with any kind of Market Enhancement clause or you're signing an open end NET Lease!

Do you REALLY TRUST them to be fair and honest with you?!

Also.. do NOT WARRANT TITLE!

Also.. do NOT agree to pay Ad Valorem!

If you've come to terms.. before signing.. get your own oil and gas attorney.. otherwise you'll be sorry later!

Permalink Reply by Silver Dollar on August 19, 2013 at 5:28am

What is Ad Valorem?

Permalink Reply by jett on August 19, 2013 at 5:20am

The "market enhancement clause" has been a BIG topic on GMS. The general consensus is that it's a very bad deal for the landowner/lessor and seriously cuts into your royalty income so less $ for you and more for the O/GAS company to keep for themselves.

Permalink Reply by Garfield on August 19, 2013 at 5:32am

Get a 20% GROSS Royalty.. otherwise you cannot hold them accountable nor trust them to be fair.

How can you monitor multiple secondary net expenses?

Why would anyone sign a Net Lease? ...because they are disguised as gross leases and they don't know any better that's why!

Any "Market Enhancement" makes it a NET LEASE and open ended to where they can deduct "Whatever Expenses" to "enhance" your gas and oil.

Of course... every drop of oil and gas has to be processed..but why should the landowner pay for their fee!

Don't be fooled.. refuse.. refuse.. refuse.. to sign anything but a straight gross lease and get your attorney to look it over and don't trust the land group's attorney.. oil company pays them don't trust em!

No Ad Valorem either!

No Compression Stations either!

No Foreign Gas either!

No perpetual shut in's at meager peanuts!

No perpetual held by production without adequate compensation!

Otherwise you may as well just say you SOLD them your rights for the price of a cheap lease where the government takes 50% in taxes anyhow. We get to keep very little.. at least start off on the right foot!

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