condensate and separate oil and gas rights

General Mineral Rights Discussion
1

Hello,

If the oil and gas rights are owned separately, and a gas well is producing condensate, to which rightholder are royalties for the condensate owed? I can see arguments both ways. On the one hand, the condensate is in some sense derived from the gas, which suggests that the owner of the gas rights should receive the royalties. On the other hand, my understanding is that condensate royalties are generally paid as would be crude oil rights, and a lease of the gas rights might not even have any royalty provision for “oil,” which suggests that the royalties could go to the owner of the oil rights.

Thanks.

2

Good question and it may change over time if there is a gas cap and then oil underneath it that comes up as the GOR changes and the gas cap is blown down. Hopefully, one of the attorneys on the forum will answer. Also, gas may have associated heavier gas besides methane, called natural gas liquids. They are the heavier gases such as ethane, propane, butanes, etc.