Mr. Tooke, I need help! I have been asked to sign this Amendment:
1. Lease Use Gas. The lease is hereby revised an amended by adding the following provision in its entirety to the end of the lease:
"Lease Use Gas. Notwithstanding anything herein to the contrary, Lessee shall be entitled to the royalty free use of all gas produced from wells located on the leased premises for its operations on the leased premises (or lands pooled there with), including without limitation gas lift operations on the leased premises (or lands pool therewith ) and re-injection of such gas into wells for purposes of enhancing the productive potential of those wells; provided, however, that this provision shall not be construed to excuse Lessee from committing waist with respect to same. Lessor acknowledges that Lessee's operations in this regard will result in the periodic deferral of sales of gas from wells completed upon the leased premises (or lands pooled therewith), and that Lessee's royalty obligations hereunder shall not accrue until such time as gas from wells completed upon the leased premises is sold or otherwise used by lessee off of the leased premises (or lands pooled therewith). Lessee shall have the right to inject gas produced off of the lease premises (“off lease gas”) on the leased premises (or lands pooled therewith) for the purposes of enhancing the productive potential of any wells located on the leased premises (or lands pool therewith). Prior to injection, Lessee show meter all Off-Leased Gas being injected on the lease premises (or lands pooled therewith). Notwithstanding anything herein to the contrary, with respect to gas produced from the leased premises (or lands pooled therewith) following the injection of any Off-Leased Gas, Lessee shall not be obligated to pay any royalties on such gas until after a volume of gas equal to the total volume of injected Off-Lease Gas (as determined by Lessee's meter) has been produced"
2. No other Amendment: Ratification. Except as otherwise expressly amended herein, the provisions of the Lease shall remain in full force and effect in accordance with their respective terms following the execution of this Amendment. Except as expressly provided herein, this Amendment shall not release, wave or excuse, and each party shall remain responsible and liable for, such party’s respective rights and obligations (or breach thereof) under the Lease, as amended by this Amendment, arising prior to, on or after the date hereof. Lessor hereby adopts, ratifies and confirms the Lease and hereby grants, leases and lets unto Lessee the leased premises or lands described in the Lease as provided in the Lease, and in each case, as amended by this Amendment.
The original lease has this Royalty clause:
3. As royalty, lessee covenants and agrees: (a) To deliver to the credit of lessor, in the pipelines to which lessee may connect its wells, the equal 25% part of all oil produced and saved by lessee from said land, or from time to time, at the option of lessee, to pay lessor the average posted market price of such 25% part of such oil at the wells as of the day it is run to the pipe line or storage tanks, lessor's interest, in either case, to bear 25% of the cost of treating oil to render it marketable pipe line oil; (b) to pay lessor for gas and casinghead gas produced from said land (1) when sold by lessee, 25% of the amount realized by lessee, computed at the mouth of the well, or (2) when used by lessee off said land or in the manufacture of gasoline or other products, 25% of the amount realized from the sale of gasoline or other products extracted therefrom and 25% of the amount realized from the sale of residue gas after deducting the amount used for plant fuel and/or compression; (c) To pay lessor on all other minerals mined and marketed or utilized by lessee from said land, 25% either in kind or value at the well or mine at lessees election, except that on sulphur mined and marketed the royalty shall be five dollars ($5.00) per long ton.
The Addendum to that lease has these Royalty clauses:
19. ROYALTY: Notwithstanding the provisions of Paragraph 3, the royalties in this lease on oil, gas, other hydrocarbons and all substances produced therewith shall be the greater of:
a. 25% of the fair market value of the hydrocarbons produced and saved and sold from a well or wells located on said land or on lands pooled therewith without the deduction of post production costs (dehydration, compression, transportation to the pipeline to which the oil or gas is sold, or other costs); or,
b. 25% of the proceeds derived from such sale or sales, without the deduction of post production costs (dehydration, compression, transportation to the pipeline to which the oil or gas is sold, or other costs); and
Additionally, Lessor shall be entitled to receive Lessor's proportionate part, One-fourth (1/4th) of all sums or other benefits payable to Lessee by virtue of products recovered or sold as a result of this oil, gas and mineral lease. Included within said term "products", but not limited thereto, is gasoline, butane, propane, other liquid hydrocarbons extracted, manufactured or recovered by Lessee or for which Lessee might be paid. The same payment formula set forth in (a) and (b) above shall apply to these products.
24. FREE ROYALTY: All royalty due under this lease as provided in the royalties paragraphs shall be paid without deduction for all costs of transportation, compression, dehydration or other operations necessary for the marketing of oil and/or gas, save and except Lessor’s proportionate part of taxes that may be due. However, Lessee may deduct Lessor’s proportionate share of gas used for lease operations. In addition to payment of the fair market value of the hydrocarbons as defined in paragraph 3 above, the Lessee shall additionally pay all post-production costs. These provisions constitute part of the consideration for this lease.
All provisions considered concerning royalties, what do I need to change in the Amendment to make sure I am being paid a cost-free royalty on everything produced from the well. And should the Amendment be attached to the Addendum, not the original lease?
Thank you in advance for your help & anyone else out there who can help me.