I am wondering about deductions on checks. I just had my second well start paying and the deductions are different on it. I was wondering if someone could explain why they are so different. The well in Carter County, through Citation Oil, only shows deductions for Severance Taxes and Conservation Taxes. Our new well in Love County, through XTO, shows deductions for Severance, Processing, Transportation, and Other. I also have received two interest checks from XTO. Just wondering why such a difference, especially transportation. Thanks
The answer depends upon the clauses in your lease and whether you allowed the extra post production charges or not and the contracts with the transport companies (especially for the Transportation costs, processing, dewatering, marketing, etc.). The interest checks were probably because your first payments were late and they were required by statute to send them.
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I just received my first royalty check from xto on a well in Love county. Can you explain what the severance tax is?
From Investopedia-
Severance tax is a state tax imposed on the extraction of non-renewable natural resources that are intended for consumption in other states. These natural resources include such as crude oil, condensate and natural gas, coalbed methane, timber, uranium, and carbon dioxide.