Post Production Cost Clause

Greetings: My family is negotiating a lease in Weld County. The company is balking at our clause for No Post Production Costs. Their alternate wording is essentially no clause at all. We have been able to include this in our last 2 leases. Should we hold firm? If that doesn’t work, what should we counter with? If we can keep the clause in with a lower gas royalty, how much lower should we go? Any advice is greatly appreciated. Feel free to PM me.

And… while in Weld County, this seems also general to CO. I hope it’s okay to post both places!

Hold firm. And don’t counteroffer. This Royalty subject must be non-negotiable. John Gustavson

Thank you, John. That’s where it looks we are getting.

Rachel, I would tend to agree with John. Post Production costs can have a significant impact on the actual royalties you are paid so in my opinion it is worth negotiating a cost-free lease even if it means accepting a slightly lower royalty rate. This isn’t legal advice so I would always recommend consulting with your attorney on the specifics. I did a webinar on post-production costs in December through NARO. If you are a NARO member, you can access all of the past webinar recordings in the member section of the NARO Website. If you aren’t a member, this is a great resource as we have new webinars each month on all areas of mineral and royalty ownership. I’m happy to share my thoughts on specific operators as well as we’ve signed leases with several for acreage in Weld County and have been able to include language limiting post-production costs. Feel free to PM me if you’d like.

Thanks, Matt Sands

Post Production shared cost on Nat gas pretty normal, definitely not for oil though.

Note that different states have different laws regarding post production charges and who pays for them. “Normal” for one state may not be the “normal” for other states.

Thanks, Jason. Problem is, as I understand, post production costs on gas can be considerable and I am unable to evaluate. Costs on oil are minimal, so no big deal.


If you have a Straight gas well or This is a gas play which I doubt then gas costs are something to reckon with but it’s simply not worth the hassle. If you tell Me the S, T and R I can tell you exactly what going On up there in WC. For Oil I have never negotiated a lease with mineral owners sharing any costs.

Jason- Thank you. I am unable to send you a PM. Can you send me one? Maybe I can respond.

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