Lessor’s proposed lease defines “gross proceeds” as gross proceeds realized by Lessee from the sale of gas or other substances, less a proportionate part of the production, severance and other excise taxes and the cost incurred by Lessee in delivering, processing, compressing or otherwise making such gas or other substances merchantable. It then adds a “No deductions” clause in an Addendum to the lease but doesn’t specifically mention these taxes as being excluded. Are severance and excise taxes then deductible from Lessor’s royalty? If so, is this standard practice?
Standard practice for severance and other taxes to be deducted from the gross owner royalties.
Yes operator must pay the taxes