Expense Clause?

Does anyone know if it is typical for the Oil Company to have an Expense Clause in the lease where they are able to deduct their expenses from our royalties? I know everything is negotiable but was really just wondering how common it is.

Nathan, It is not common and I would not sign the lease without striking the expense clause and adding a no deductions clause to your Addendum.

Thanks Martha. They seem to be being pretty stubborn with that one.

Expenses can be most of your monthly royalty check then they get your minerals for practically free. It's not an OCC rule that they have the right to charge post production expenses.

That’s what I was afraid of. Thanks again.


Martha is correct. No expenses can be subtracted from your royalty payments. Additionally, do me a favor, if you are able, to have Martha and her husband contact me. I do not know how. It would be appreciated.

Is it normal for a company to send a lease offer with an 8 day return request or be pooled. It is from EKN holdings. I feel rushed. Any help would be greatly appreciated. Thanks G. Win

That is a common tactic. Actually nothing wrong with pooling. It can be quite beneficial. What Sec-township-range and I can look up the pooling (or lack thereof) documents.

12-20n-7w application #201805721. I also have rights to 8-20n 6w. Longfellow Energy sent a letter about payment of pooling bonus and to wanted me to sign W-9 in June. They received my W-9 on June 11th. I haven’t received the check yet. I sent a text inquiring and this was the response.

 Right now we are transitioning operators as we have sold our Garfield and Kingfisher properties to SK Nemaha.  I submitted a check request to them, but I don’t see they have cut that yet.  I will reach out and make sure they have it in queue.

They were fracking the well on Monday of this week. Thank you for your help!! Gregg


201805449 is change order for operator from Longfellow to change to SK Nemaha LLC for many properties, wells, etc.

201805721 is the pooling order. It was just filed on July 19. Chapparal is to be the operator. I do not see a date for the hearing yet.

EKN holdings is probably trying to lease and get their lease filed at the courthouse before the pooling order time frame of 20 days. Make sure you do not hand over a signed lease without getting a check in hand. No 30-60 day hand off in which EKN can flip to someone else and wait on their payment in order to pay you.

Just a note, if they only offered 3/16ths, there are much higher royalties being offered, so ask for more. Also, make sure you have a depth clause, no post production charges, limit your shut in time, no top lease clause, do have a commencement of drilling clause, etc. PM me if you need more help in negotiating.