I am reading alot about market value, market price, proceeds. Also whether a person should base their royalty on the wellhead, sold off premises or at arm’s length. Do not understand. Which is best? Thanks.
Liz:
If the lessee will agree to it, it is of course to your advantage to eliminate the transportation costs of the crude but many times, there are stipulations made during negotiations such as a lesser royalty amount, etc. if this free transportation clause is entered into the lease.
I would gladly accept 18% from which nothing could ever be taken from except taxes rather than 20% from which they could take taxes and post production costs because at some time in the future the post production costs could lower your royalty by 99.99%.