I have been offered 18% royalty - I own 25% rights on 400 acres - 100 net acres - line 5 of lease says if we own less than the entire & undivided fee simple estate, royalties would be paid in proportion my interest to the whole & undivided fee… Do I only get 4.5% royalty or is that already figured with my net acres???
If I understand you correctly; it means that you get a royalty equivalent to 18% of the production attributed to 100 acres. I call 18% a bad deal unless it is stated as cost free, then it would be an okay deal. My brother and I each have an equal amount of acres under a well and are taxed at the same rate and his 16% cost free royalty yields checks larger than my 19% leased royalty which bears costs and expenses. Not to mention that my brother’s carried interest will pay 100% royalty after his part of the well and a 50% penalty are paid off out the remainder 84% of his production. If you lease watch the costs!
It says - to deliver to lessor, free of cost 18% of all oil produced & 18% of all gas produced…
That part means you don’t pay for the well and is standard. You need to watch the part where it says you bear expenses for rendering the product into a marketable form, gathering, filtering, dehydrating, compressing, separating and of course transporting oil and gas. Read the fine print. Look for that part in your lease.
There is no fine print, and I do not see anything like that on here. The lease seems to be very straightforward (if you can understand their lingo). It’s only 3 pages with an attachment clarifying the royalties and the limit on the shut-in gas clause. Also the 3-year with option for 2-year with payment at the $$$ per net mineral acre.
If it’s cost free, great! That’s a great hurdle. You might want to check Buddy Cotten’s blog about the lease with option to extend titled “3 YEAR PLUS 2 YEAR KICKER LEASE.” Good luck.