No Deduction Clause

Is it reasonable to request a no deduction clause that states:

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, separating, treating, dehydrating, compressing, processing, transporting, and marketing the oil, gas and other products produced hereunder to transform the product into marketable form. In no event shall Lessor receive a price that is less than or more than the the price received by Lessee or any Lessee affiliates thereof.

Is a two consecutive year statement in a shut-in policy a standard policy or can one year be asked instead?

Seems like my siblings want to back off and use what we used to have in a former lease exhibit A because they are anxious for the good bonus offer and the royalty. If it is based on the old, then they may not have the no post-production paragraph or a good no deduction paragraph in regards to "enhancing" as determined by the lessor.

Up to now, we have tried to stick together on what we request but I think my siblings are folding. Does this put me in jeopardy if they don't want to go along with me and add the above listed "no deduction" clause and the "shut-in policy" changed to one year? I think the siblings may be sacrificing and wouldn't it possible for this to make a big difference in the future if they were to drill a producting well?

A few weeks ago, because I asked to see a new copy in order to study it before making a decision, the company called back within five minutes and told me that since I was not willing to work with them they were not interested anymore. I was flabbergasted and felt like it was a strong-arm tactic. I did not respond but when my sibling talked to them they seemed to say I was still included. I have mixed emotions on this. I would hate to see my siblings not get what they think they want by having to back down on things I think are reasonable. I had consulted and paid for an attorney and a former landman to help me get a reasonable lease exhibit. Now, I feel like if I don't go along by reverting to their demands, am I likely to get shoved to the side and then later pooled instead of receiving the bonus and royalty my siblings are going for.

Any advice? Should I wait to see what they send and then call them back. Are they just trying to rush and might it still be possible to take some more time on this matter?

What state are the minerals in? It sounds like you and your siblings are co-tenants of the minerals in question, is that true?

Grady County, OK. We each own 6.66 acres individually in the same section. We inherited them individually from our mom. We had determined we would try to all work together to negotiate the best terms for each of us to benefit since we had small acreage amounts. I have done most of the research but the landmen seem to have been calling my sister the most and trying to get us all to sign the same deal. I understand that my sibs are getting anxious to see something come of the several offers we have received this year but I had paid a lawyer and a retired land person to look over what we had been offered and have spent considerable time trying to research. The company has been balking on several clauses we requested such as Force Majeur. Maybe I can go along with that but they proposed had a no post production clause BUT left in that they could "enhance" production later with us bearing part of the cost. That is what I object to. If they sign by reverting to things we tried to avoid, do I lose my chances of leasing at the same price and royalty if I hold off and continue to ask for a better defined post-production clause AND a shorter shut-in clause. I don't know if I take more time if it will help me or hinder me. Several weeks ago because I told them I would like to see a new print out of each clause and what they did or did not want so I could study it before making a decision. Immediately they called me back to say since I was not cooperating they were withdrawing their offer. However, they called my sis and went over the points with her. She explained that I was not demanding - just wanted a review and they told her that I was still in the deal and would not be left out. Now the siblings have gotten antsy and are taking a step back.

If I hold out, am I more likely to be force-pooled and then get less than the 1/5 offered in this current offer? You may message me for more detail.

If you own minerals in Grady County, 1/4 and a good bonus is normal. I use a tough Exhibit A and still lease. Normally I wait for Force Pooling. Just sent a letter to the operator and one to their attorney on a pooling. Offer was 1/5 and $4000.00/NMA. I chose 1/4 and $1500.00. 3/16 offer was $4500/acre and 1/8 was $4750.00/acre.


My philosophy to leasing is that a bad lease is much more costly than no lease. You should negotiate every oil and gas lease as if it's the last lease you will ever get to negotiate for those minerals (hopefully it will be!). You should get the contract terms and royalty that you want, and then go for the best bonus they will pay you.

People who are afraid to miss out on one bonus payment are the people who make bad lease deals. To me the bonus is the least important factor in my decision to lease. I am concerned with my royalty rate and my contract terms being acceptable. I won't lease without both the royalty and terms being acceptable to me, no matter what the bonus is. The bonus is a little extra compensation, but it doesn't stack up against the royalties your minerals can produce over time. A bonus is a one-time payment, royalties can be forever.

Also, mineral owners almost never go wrong by waiting to see if a better offer comes in later. The first people to lease in a new area get the lowest bonus and royalties, the last people to lease often get mopped up for much more. As a mineral owner, time is on your side.

My best leasing advice, is to know exactly what you want, and be prepared to walk away if you don't get it. If the company says you are "not cooperative" because you want to negotiate a better deal, you shouldn't lease to them. You have obviously done your research and gotten professional advice, I say you stick with your guns and wait for a deal you can live with.

Thank you so much. You are expressing my sentiments but I am new to this and after spending so much time reading, I don't want to take backward steps. I just needed someone to give me a little nudge in the right direction. I appreciate your time.