Our attorney doesn’t seem to be concerned about this clause in the will…is this customary?
Lessor shall receive its proportionate share of the proceeds less its proportionate share of all costs actually incurred by Lessee from the wellhead to the point of sale and its share of all production, severance and ad valorem taxes.
That’s standard in all leases I have seen. Actually, that is beneficial to the mineral owner also as they can’t change how you’re paid. If you’re dealing with a reputable oil company operating in your area, all their leases are quite standard and the attorneys know that, but they gladly take your money for glancing at it.
One company I won’t mention by name had this in its lease, but it was discovered they were paying based on costs to delivery point instead of wellhead. This was discovered and I believe they settled out of court for about 140 million dollars to mineral owners a couple years ago.
We are to receive the product, be it gas or oil, at the pipeline or the tank, not the wellhead.
When we leased our rights we insured that we get paid at the well head, before any pipeline and transport costs. I’m ignorant to all of this but it was my understanding that this would benefit us and it makes sense to me if I get paid at the well head I’m not paying any of the transport costs.