Bob,
Yes it is a situation of it’s easier to recognize the more examples seen no matter what dialect of legalese spoken. So they’re saying that the royalty is going to be paid only on unprocessed gas. A little background, shale plays have fairways ie different oil and gas cuts, sometimes even 50/50. In laymen’s terms you’ll hear things like volatile oil, condensate, or wet/dry gas. Most stubs break out payment by oil, gas, and simply products. I think it’s fair to say that there has been an increase in the amount of products derived from oil and gas; and, demand for refined products such as LNG, LPG, and other hydrocarbons such as butane, ethane, etc., all with a different value. There may be a situtaion where the processing, marketing, etc., less expenses, results in a higher royalty received. Below is an example from a lease describing such. In practice, most of the change happens further downstream; and, the operator gets paid for what they produce, in accord with their contracts, same as the mineral owner.
- It is agreed between the Lessor and Lessee that, notwithstanding any language herein to the contrary, all oil, gas and other proceeds accruing to the Lessor under this Lease or by state law shall be without deduction for the cost of producing, gathering, storing, separating, treating, dehydrating, compressing, processing, transporting and marketing the oil, gas and other products produced hereunder to transform the product into marketable form; however any such costs which result in enhancing the value of the marketable oil, gas or other products to receive a better price may be deducted from Lessor’s share of production so long as they are based on Lessee’s actual cost of such enhancements.