Mineral interests 36 T7 R9

I was contacted today by an agent of McDonald Land Co. on behalf of Corterra. After some discussion I was offered $500 per acre bonus and 5/16th royalty if I would accept there post production clause which basically says I will be responsible for a proportionate share of the cost to enhance the gas/oil to receive a higher market price. The offer was for my interests in s36, T7,R9 and s2, T6, R9. has anyone else talked with McDonald regarding these sections? I appreciate any information regarding this matter, thank you.


Hi Virgil, our minerals are only in the southern part of the county, so others will need to address those questions.

I will attempt to address what may happen with a no-deduction vs enhancement clause, from personal and on-going experience. First some background. We have two identical tracts (inherited in the same proportion from a grandfather through 2 of his children), both with the same royalty rate, in this case 3/16, and therefore the same decimal interest. Both tracts were leased prior to the onset of horizontal drilling in the area, with one of siblings asking for the inclusion of “No deductions”. The other sibling just signed the lease as presented.

Now, nearly 9 years since production began (4 wells in that section), the monthly checks differ by an average of about 33%, so the distinction is constant and vivid.

I personally have never seen a royalty rate offer higher than 1/4, so a question to consider would be “How much will the extra 1/16th to 1/8th royalty they are offering offset their ability to deduct whatever expenses they choose?”

Recently a forum poster offered an alternative to the no deduction clause which is often rejected in negotiations. It is a Limited Deductions clause which could be countered by the lessor (see the attachment). I cannot vouch for it in any way, but I may use it if given a chance.

Disclaimer: I am only a mineral owner with no professional qualifications in this business. Good luck in your negotiations.

Sorry, here is the Limited Deductions attachment.