Deductions on current wells

We have minerals in Section 31 T 12N R5W We are under a old lease dating back to the 1970’s. The old wells have no deductions but Jones says on our new wells that we pay deductions. I can not find anywhere that states about any deductions. What needs to be done to solve this issue. We only get 1/8 and the checks are small. The deductions go as high as 20% of the minerals. Sometimes they are higher than the income.

The taxes are a legitimate deduction, but any transportation, marketing, etc. need a pushback. Look at your old lease and make sure it says gross proceeds and not “net” proceeds. If it says “gross”, then you may need to send a certified letter return receipt with a copy of the lease demanding the “gross” proceeds. This may require some legal intervention if that does not work. Oklahoma is a “implied covenant to market state” which means that they have to get your product to market without charging you (unless your lease allows it), so those old leases were almost all gross leases with no post production charges.

That being said, many of the accounting programs have automatic “switches” that have deductions turned on. They may have to reset their deck to include your lease that is no deductions.

Thank you for the info. I will read the contract and let you know. Thank you so much.

I found that we do have gross production. I have contacted Jones and they are looking into the contract. There is not a depth clause that I could find. Is there any law that would allow us any pooling money or does it not qualify due to existing drilling . Not sure if it being a 1973 lease, since the depth clause was not stated and anyone could drill any depth due to no clause.

The 1973 lease will hold to all depths if there is no depth clause.
So you are held by production (HBP) on the old wells and any deeper drilling will not get a chance for leasing or pooling. Lots of us are stuck with those old leases.

Thank you Martha, I thought that was the way it was but wanted to double check since old leases are different than the current ones. Appreciate your help. The help with deductions was very helpful. Jones has past it on to other depts to review but very promising without legal intervention . I gave them all my family owner numbers to correct it for all of us. Thanks again