Market Enhancment Clause and the MWCD/ Antero Lease

I have followed many of the discussions on this site about the market enhancement clause that the oil & gas companies want to include in their leases.

I have also read this same clause in the MWCD /Antero lease on the Seneca Lake land.  The MWCD did accept a market enhancement clause in their lease.   A copy of that lease is attached.

http://http://www.mwcd.org/upload/documents/conservation/Seneca_Lak...

My questions are:  if the market enhancement clause is so bad why do you suppose the MWCD, with over 6,700 acres of land at Seneca, would have accepted this clause if they thought it would reduce their royalties in any way?   Does this clause in the MWCD lease appear superior to others market enhancement clauses? 

I would think the MWCD would have hired a multitude of attorneys to review the Antero lease and they would have made sure they got the market enhancement clause wording correct.  With the size of the MWCD lease (hundreds of millions of dollars of royalties at stake), would they have not got this right?

Curious to others comments as I am unsigned and still leery about these market enhancement clauses.  Appreciate your comments!!

http://www.mwcd.org/flood-control-and-conservation-stewardship/cons...

Views: 4091

▶ Reply to This

Replies to This Discussion

Permalink Reply by Scott T. on December 18, 2013 at 12:09pm

Link reattached above.

Permalink Reply by Joseph-Ohio on December 18, 2013 at 1:12pm
Link is down - doesn't work.
Permalink Reply by Scott T. on December 18, 2013 at 1:44pm
Permalink Reply by Scott T. on December 18, 2013 at 1:50pm

I am not adding the link correctly but it is easily found if you google: Seneca Reservoir oil & gas lease.

Permalink Reply by Joseph-Ohio on December 18, 2013 at 1:59pm
Saw this before.
Download it back then.
Looks like more doubletalk.
......without deductions.......however......
Thanks for the for the pointers to the download this evening however.
Permalink Reply by Scott T. on December 18, 2013 at 2:47pm

Don't disagree with you......just dumbfounded that an entity with 7000 acres would accept any market enhancement wording that was not vetted by a multitude of attorneys.  With hundreds of millions at play you have to figure they negotiated it carefully,  If a landowner with the legal resources of the MWCD gets it wrong then how are the small landowners going to negotiate something better?

Appreciate your feedback. 

Permalink Reply by Joseph-Ohio on December 18, 2013 at 3:04pm
Don't know friend.
Have to try.
But I must admit it surely appears to me that all Utica Point Pleasant fairway landowners have their neck in a noose while standing on a precarious perch doesn't it ? ?
Care, be aware, try to protect yourself at all times, good luck to all of us, we need it, we're in a scrap from the looks of it to me.
Permalink Reply by Philip Brutz on December 18, 2013 at 3:12pm

http://mwcd.org/upload/documents/conservation/Seneca_Lake_Lease_Add...

MARKET ENHANCEMENT: It is agreed between the Lessor and Lessee that, notwithstanding any language herein to the contrary, all oil, gas or other proceeds accruing to the Lessor under this Lease shall be paid without deduction for, directly or indirectly, any post-production costs, including but not limited to, the costs of producing, gathering, storing, separating, treating, dehydrating, compressing, processing, transporting, and marketing the oil, gas and other products produced hereunder to extent such costs are necessarily incurred to transform the product into a marketable form; provided, however, any such costs which result in enhancing the value of already marketable oil, gas or other products may be deducted from Lessor's share of production proceeds so long as such costs are reasonable and do not exceed the value of the enhancement obtained by incurring such costs.

Permalink Reply by Joseph-Ohio on December 18, 2013 at 3:18pm
Riiiiiiight.
I understand.
MARKET ENHANCEMENT: .........without deduction.........however.........costs........may be deducted....
Permalink Reply by Scott T. on December 18, 2013 at 3:28pm

But why would they sign this?   I understand a small landowner with small acreage not hiring an attorney and signing a lease with an inferior market enhancement wording but these folks might end up getting 1 billion when it is all said and done.  Don't you think they thought this wording was in their best interest and had great legal minds signing off?

Permalink Reply by Joseph-Ohio on December 18, 2013 at 3:32pm
Maybe it will end up in the courts someday ? ?
Permalink Reply by Philip Brutz on December 18, 2013 at 3:34pm

It is still a better deal than we are getting from Federal land.

http://www.reuters.com/article/2013/12/17/usa-energy-royalties-idUS...

"Drillers now pay a 12.5 percent royalty on oil and gas pulled from federal land. Since 2009, Interior officials have contemplated increasing the government's take to match global standards, according to the GAO report.

Officials last year drafted plans for an 18.75 percent royalty for onshore oil production but decided to put those plans on ice, according to the GAO report."

RSS

© 2024   Created by Keith Mauck (Site Publisher).   Powered by

Badges  |  Report an Issue  |  Terms of Service