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Permalink Reply by Kris Park on September 8, 2010 at 12:19pm

Of course you should verify this with legal counsel, but your original contract (lease agreement) should stand as originally documented. Ideally, you reviewed the original with some sort of legal aid to ensure that ammendments are to be agreed upon by both parties.

All to often the lease agreements that the landmen are shopping around are greatly bias toward the company. Hence, opening the door to the possibility that they might have preserved the right to make these changes. However, having a landman seek your signature would indicate a substantial change in terms. You should take a close look at the language of the original versus the ammendment.

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Permalink Reply by 0l1a6laz7smpf on September 9, 2010 at 1:34pm

Hi Catherine,
Sounds to me like you need to get your answers and soon. From the info you posted above it seems that you have signed a contract that would give you 'net' royalty not 'gross'. There may be some way that you could amend your contract to 'gross' not "net" so you better get to work on reviewing that addendum if that landman was there to help you not hurt you... But one of the best efforts forward is to call the lessee (gas/oil company) that is leasing from you and speak with someone first to clarify what you have mentioned in this forum and to identify what type of royalty clause is in your contract. If it is true that their original contract clause regarding transportation charges for the Lessor to pay has been in conflict with the state of New York then research that....that is very important. As far as an attorney ...best to obtain one that is very experienced in oil/gas leases if you go that route...but a year has passed...and the well has showed up at your door way. Let us know what happens in a reply here...if you will pls.
I know that there is so very much to learn about all of this...so you are not the only one trying to find the way thru the forest of leasing clauses.

Hope this also helps... I copied and pasted from a reply I posted in another discussion regarding royalty clauses.

"There are lease clauses that identify paying the lessor a royalty based on the gross not the net. Your best interest is to obtain a lease with that clause and negotiate it into the contract. On my lease it is called, "royalties (gross vs. net)" and it explains that there will be no asssessment or deduction from the royalty share for the transportation of the product. Now there is another clause on the addendum called the "market enhancement clause" which further defines the definition of the 'gross' royalty for the Lessor...and also secures the Lessor's payment in further definition."
Note: "market enhancements" have something to do with additives added after it leaves the wellhead in order to make the natural gas more profitable in other ways of retailing the product...there may be some charge towards the Lessor in that area of order even if the contract is for 'gross' ...but again it is up to what was negotiated regarding royalty.

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