Reviewing the production on our lease, a small portion of the gas disposition is coded as "2" by the RRC. I have read the definition of the code at the RRC website but don't know exactly what is saying! Can anyone give me an example of where the gas is going, other than being sold, based on the code?
Thank you.
Lauren,
I'm not sure, but the (production company/oil and gas company)could be using this amount of gas in the motors of pumping unit/ treating/separator/compressor units. Some leases allow that to be done with no charge to the company.
Clint Liles
Code 2 - Transmission line. Code 3 - Processing plant. Code 1 will be lease use. If you are supposed to get value at the well, just make sure you are either getting code 2 or 3. Gross production - get the total volume produced. If the operator is allowed to take out deductions (value at the well) just make sure they are not taking out too much for processing, etc. or they could just be lowering your price to reflect the charges. Get a natural resource attorney to negotiate a good lease and verify through audit if over 5 wells. Do it yourself if you can with less. If you are getting paid a good amount of money, let an auditor do it. If not, just not worth the expense, although deductible.
Brian,
Thanks for the clarification.
Clint Liles
Brian Upshaw said:
Code 2 - Transmission line. Code 3 - Processing plant. Code 1 will be lease use. If you are supposed to get value at the well, just make sure you are either getting code 2 or 3. Gross production - get the total volume produced. If the operator is allowed to take out deductions (value at the well) just make sure they are not taking out too much for processing, etc. or they could just be lowering your price to reflect the charges. Get a natural resource attorney to negotiate a good lease and verify through audit if over 5 wells. Do it yourself if you can with less. If you are getting paid a good amount of money, let an auditor do it. If not, just not worth the expense, although deductible.