How much is too much post production cost. I.E. .1% or maybe 33%?

Just checking, my post production cost seem excessive to me. Average 33% sometimes more.

I believe im being took to the cleaners but my work clothes are still dirty. I would also like to see an example of the language that allows for these cost and an example of the language that forbids these cost. Any help on this would be great. I believe their is alot of people being taking for a ride in West Virginia and i for one dont like it. Let see if we can get our ducks in a row so that we know we are right and get the word out to everyone that has an interest in WV. With the technology today we can reach everyone. West Virginians united can't be beat!

There need not be and probably isn't any overt language in a lease that allows the lessee/operator to take out whatever they feel like in post production costs. It is assumed that they can if there is no language expressly forbidding it. The operator lessee can also sell the oil to himself through a subsidiary for half price and base your royalty on that half price, unless your lease has language that forbids it.

Many mineral owners are at the operators mercy and probably the only thing that holds an operator in check is public opinion and ones like Chesapeake didn't care about public opinion a short time ago when fighting for it's life as a company and some peoples royalty checks dropped 80% or more from one month to the next.

Since one can not trust the operator, you do not want to sign his lease form, unless you have an exhibit A created by your experienced oil and gas lawyer that overrides just about everything in the lessee/operators lease or use your own lease form that you paid an experienced oil and gas lawyer to create.

This has all been said many times in the past year or two, you might do some searches to learn a little more. Best of luck to you.

How about 88%? True story.

You are right Andrew, I was using a relatively conservative number because I wasn't giving a source and losing 80% of someone's royalty seemed horrific enough.

Andrew said:

How about 88%? True story.

RW, I wasn't one-upping your comment, just answer the question "how much is too much." My answer would be somewhere between 0% and 88%...

Andrew, I knew that one-upping wasn't your intent.

It's a horrifying situation and I would be surprised if politicians actually do anything about it. When the spokesperson for the royalty owners association speaks in terms of 1/8 royalty from each gallon of gas produced by the well, I really hope someone was misquoting her, but I think it shows the level of attention that the issue is really getting. Hope I am wrong this time. I hope everyone who has minerals in Pa speaks up, because you have some attention now and you should make the absolute most of it because uproar has a brief shelf life.