What should be changed other than % in this offer either by adding or deleting or rewording? Thanks
Royalties. The royalties to be paid by Lessee are: (a) on oil, One-Eighth (12.5%) of that produced and saved and delivered at the wells or into the pipeline to which the wells may be connected. Lessee may from time to time purchase any royalty oil in its possession, paying the market price then prevailing for the field where produced, and Lessee may sell any royalty oil in its possession and pay Lessor the price received by Lessee for such oil computed at the well, less One-Eighth (12.5%) of all Post Production Costs and less the same fractional share of all production, petroleum excise and severance taxes; (b) on gas, including casinghead gas or other gaseous substance, produced from said land and sold or used beyond the well or for the extraction of gasoline or other product, an amount equal to One-Eighth (12.5%) of the net amount realized by Lessee computed at the wellhead from the sale of such substances. On gas sold at the well, the royalty shall be One-Eighth (12.5%) of the amount realized by Lessee from such sale, less One-Eighth (12.5%) of all Post Production Costs and less the same fractional share of all production, petroleum excise and severance taxes.
The royalties to be paid by Lessee are: (a) on oil, One-Eighth (12.5%) [ask for a higher %] of that produced and saved and delivered at the wells or into the pipeline to which the wells may be connected. Lessee may from time to time purchase any royalty oil in its possession, paying the market price then prevailing for the field where produced, and Lessee may sell any royalty oil in its possession and pay Lessor the price received by Lessee for such oil [add: volume ] computed at the well, less One-Eighth (12.5%) of all Post Production Costs and less the same fractional share of all production, petroleum excise and severance taxes; (b) on gas, including casinghead gas or other gaseous substance, produced from said land and sold or used beyond the well or for the extraction of gasoline or other product, an amount equal to One-Eighth (12.5%)[ask for higher %] of the net amount realized by Lessee [add volume] computed at the wellhead from the sale of such substances. On gas sold at the well, the royalty shall be One-Eighth (12.5%) [ask for more] of the amount realized by Lessee from such sale, less One-Eighth (12.5%) of all Post Production Costs and less the same fractional share of all production, petroleum excise and severance taxes.
Add some wording about arms length sale of the gas to disinterested third parties. This is just my quick thoughts. There is probably more needed to make this resistant to an unscrupulous interpretation.
All the old leases in WV don't require royalty owner to pay taxes. I hope these companies settle down on these deductions. They flash the high (for WV) royalty % and $ for bonus and hope we won't know that what one hand giveth the other taketh away.
Nancy, would the word gross be used in with volume or the same? The arms length sale or a sale to an affiliated party of which the lessee owned so much % in. When the company adds a gross proceeds clause to a lease it usually gets swallowed up by the wording above. They dangle a clause out there as if to say, look here what we are going to do for you. Then they cancel most of it out in the lease.