The deduction cost for compressing N Gas on 3 of our wells with Derby Exploration runs around 30% of the gross sales every month. This seems excessive. The only costs that they are to deduct are those that make their royalty owners more revenue. Is this normal now?
It depends on your OGL terms on whether they can pass on this cost. The delivery to market cost can become quite large when you have low volume and low pressure gas wells that deliver into high pressure lines.