2015 Legislative Session
The 2015 Legislative session has begun!
You will be pleased to know the West Virginia Royalty Owners Association has been down at the Capitol representing the state’s royalty owners. Forced pooling as always is a major topic of this session. We have spent numerous days discussing Forced Pooling and related issues with the heads of IOGA, NARO, SORO, West Virginia Farm Bureau, West Virginia Land and Mineral, West Virginia Oil and Gas Association and delegates of the State Senate and House of Representatives. These discussions have been very productive, with all sides demonstrating a desire to negotiate in good faith to get this matter settled once and for all. We are cautiously optimistic that this will be accomplished.
Last Updated (Friday, 16 January 2015 15:42)
What Post Production Deductions will Do to YOU
How Post Production Deductions Affect Your Royalty Check
We advocate a cost free royalty clause whenever someone asks about a lease, so the question is what really are “Post Production Costs”? Here is a list of some of the deductions we recently saw on a royalty check:
Compression Fee (3 different types)
Marcellus Cone Gathering System Charges
Marcellus Flat Fee Production ($1.20)
Marcellus Post Production Cost (3 different types)
Plant Processing Fee (2 different types)
Transportation (2 different types)
This is how much a simple 12.5% royalty would be impacted by allowing for post-production costs.
This Royalty Owner would lose $1,274.53 a MONTH! Over HALF of what they should have gotten.
Leasing Clauses to Look for
Top Leasing Clauses to Include or Remove!
1. Specific Depth Reservation
· Lease only the Marcellus, or only the shallow formations; never lease the surface to center of the earth.
2. Lease only Your Tract
· Avoid language that includes words such as adjacent, or contiguous; it can allow them to hold your tract even though there is no production.
3. Your Royalty Payments are Deduction Free
· Deductions or post production expenses on royalty payments can reduce a 12.5% lease to under 6%.
4. Avoid Enhancement Clauses
· Enhancement clauses have been used against royalty owner’s under the guise of ‘The gas is not marketable at the well head, so transportation is an enhancement’; even if your lease says deduction free.
5. Pugh Clause
· If a portion of your acreage is not included in a unit, the non-developed acreage is released, allowing for another company to potentially develop it.
6. Warranty of Title
· Do not give any warranty on your title, in most cases you haven’t done title and they have approached you wanting to lease.
7. Limit on Shut in Payments
· Put a time limit for how long a shut in payment can hold your lease in full effect.
8. ALWAYS Consult a Lawyer
· These are a few things to watch for and should not be considered legal advice, find a good oil and gas lawyer that will be able to assist in the leasing process.