We received a lease to review. It purports to be a no deduction on royalties lease with the following exception. I have not come across these terms before and was wondering if anybody could explain the clause and the possible costs incurred.
Thanks.
....except for, if applicable, Lessor’s proportionate share of downstream transportation
expenses for any sales of Leased Products made at a distant sales point in a
downstream market (e.g., New York City Gate) after delivery to the point of
sale at the interconnect with the interstate pipeline, accompanied with
supporting documentation as to the cost basis of such downstream market sales;