I asked the operator how they calculated $$/bbl payment to me, lessor, i.e. it looked a little low, and this is the reply:
I checked on your inquiry and the below is what I received from marketing.
“November WTI was $41.2777. After deducting the transportation cost, location/quality diff, pipeline loss allowance, and the roll, this gets you back to the $37.77. The WTI price did start to rise in November, but it also include a full week of prices in the 30s. You should see a large increase on the December price with WTI averaging at $47.0682.”
THIS IS MY QUESTION: Why are they deducting, or what gives them the right, or is it normal/correct to deduct those costs from the wellhead price?