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I think what you’re referring to is referred to as a ‘market enhancement’ clause - and the reality is that it can be used to permit many deductions. It comes down to the interpretation of ‘enhance and more marketable.’ If an operator says that they need to compress gas to get it to market, does that make it more marketable? Does that enhance value? If you’re in a wet gas area, then gas processing enhances a product and therefore should fall under that provision. But you need to make sure that you end up with a net positive outcome from processing - in other words without shrink and processing costs do you have more revenue without processing, or after processing.
At the end of the day it’s a slippery slope and there are multiple ways to slip cost through. Where is the price point for your gas sales? At the sales point, at the wellhead, or somewhere else? Each place implies potentially different values.
My apologies for any misspelling - iPhone screen seems really really small today.
if you let them put a “however” “except” or anything other than NO DEDUCTIONS they can just about do what they want. Tell them No Deductions needs to remain in the Exhibit…