I was just presented an oil & gas lease from a leasing company on behalf of Chesapeake in Tarrant County. The royalty % is 25% computed at the wellhead (this leasing companies standard lease form), and the language they suggested when I told them I would need a no-deductions clause is the following:
"It is agreed between Lessee and Lessor that, not withstanding any language herein to the contrary, all oil, gas or other proceeds accruing to Lessor under this lease or by state law shall be without deduction for the cost of producing, gathering, storing, separating, treating, dehydrating, compressing, processing, transporting and marketing the oil, gas and other products produced hereunder to transform the product into marketable form; however, notwithstanding anything contained herein to the contrary, any such costs which result in enhancing the value of the marketable oil, gas, or other products to receive a better price may be deducted from Lessor's share of production so long as they are based on actual cost of such enhancements."
Anyone have an opinion on whether this no deduction clause would actually mean that there would be no deductions from the checks (other than the production taxes of course)? The second phrase beginning with "however,...." is what irks me and makes me think the clause may not achieve my objective.
This property is very small, and frankly, I have very little leverage in this negotiation, so hiring an attorney to review would be neither economical nor effective in all likelihood since the leasing company has already rejected some other minor tinkers that I have requested and they don't need my property for this unit so far as I can tell (as I am on the edge of the unit and could easily be cut out if I dont bend over and assume the position).