I was approached by Aspera Energy a few days ago to lease acres in Okfuskee and Hughes counties. Everything looked good until they changed the wording of my "No Deductions" clause in the Exhibit A clauses I sent them to a "Limited Deductions" clause which reads as follows (Aspera added the part in red):
NO DEDUCTIONS: It is agreed between the Lessor and Lessee that, notwithstanding any language herein to the contrary, all oil, gas or other proceeds accruing to the Lessor under this lease or by state law shall be without deduction, for the cost of producing, gathering, storing, separation, treating, dehydrating, compressing, processing, transporting., and marketing the oil, gas and other products produced hereunder to transform the product into marketable form, however, Lessor’s share of 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. However, in no event shall Lessor receive a price that is less than or more than the price received by Lessee.
I told them I was wary of going to a "Limited Deductions" clause despite their indication that "most are okay with it." I was going to go ahead and accept the "Limited Deductions" clause, IF they were willing to change it to a more specific wording. However, Aspera is resistant to changing the wording to one I found here at the MI board (posted awhile back by M Barnes), which is copied below. Should I refuse leasing to Aspera because of this issue?
LIMITED DEDUCTIONS: Notwithstanding any language contained herein to the contrary, all oil, gas or other proceeds accruing to the Lessor under this lease or by state law shall be without deduction, for the costs of producing, gathering, storing, separating, blending, treating, dehydrating, compressing, manufacturing, processing, transporting, and marketing the oil, gas and/or other products produced under or otherwise covered by this lease to transform such oil, gas or other product into marketable form or to make such oil, gas or other product ready for other use; however, Lessor’s share of any such costs which result in enhancing the value of such 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 and are otherwise in compliance with the guidelines established in Mittalstaedt v. Santa Fe Minerals, Inc., 1998 OK 7, 954 P2d 1203. If deductions are taken for any post-production costs as described above, Lessee, upon Lessor’s written request, shall provide the Lessor a detailed analysis of each such cost and how and in what amount each such cost enhanced the value of such oil, gas or other products.
Thanks in advance for any help you can offer!