Can someone please tell me what this actually means:
"4. As royalty, lessee covenants and agrees:
(a) To deliver to the credit of lessor, in the pipe line to which lessee may connect its wells, the equal one-eight part of all oil produced and saved by lessee from said land, or from time to time, and the option of the lessee, to pay lessor the average posted market price of such one-eighth part of such oil at the wells as of the day it is run to the pipe line or storage tanks, lessor’s interest, in either case, to bear one-eighth of the cost of treating oil to render it marketable pipe line oil."
Does that mean the lessor gets a full 1/8, minus 1/8 the cost to “render it marketable pipe line oil.”?
Dear Mr. Meinzer,
Si, amigo. That is exactly what it means, unless there has been a modification to the royalty provision elsewhere in the lease, which modification takes precedence.
Thank you.