I have a lease which calls to be paid according to what was produced… However i am only getting paid off what is sold…the turbine meters after the separators show about 30% more flowing to the oil tanks than what we are have been paid… Day to day measurements appear to be within 1%. The well has been on almost a year. There are no security measures in place to make sure no oil is stolen… Any suggestions?
I will bet that your lease says "produced and sold" not produced. The lease may also allow the operator to use product on the lease at no cost to say nothing about beneficiation, arms lenth sales and transportation. In addition there are many physical adjustments that come into play between the well head and sales like temperature, gas and water in solution, pumper maintenance sulphur content, etc. Lease terms are always more important than a little bonus.
Hi Gary,Darn attorneys...told me it was supposed to be off of production only...
OIL: On oil, twenty-five (25%) percent of the gross production or gross proceeds realized by Lessee.
You are correct as always!
Thanks for your time.
J L,
Here is an article I wrote on this topic which I think will add some context for you. http://www.mineralweb.com/owners-guide/leased-and-producing/oil-gas-measurement/
Kenny DuBose,
MRF founder