San Augustine Royalty Deductions( UnderAethon, BP, XTO)

In some of the older 06’ -09’ leases it says the lessor/landowner is responsible for some of “the costs incurred by Lessee in delivering, processing, or otherwise marketing such gas” .

My question is, other than Ad Val, and severance taxes have these operators added any huge deductions that royalty owners notice and are noticeable on check stubs? Thanks, any info helps

That would be a potentially dangerous phrase for a mineral owner but not uncommon in Texas. The possible charges might be for expenses of production, separation, gathering, dehydration, compression, transportation, trucking, processing, treatment, storage or marketing -just to name a few and they can really add up.

Yea its weird, most if not all of the Aethon Leases Carried over from Saint Marys, Cabot have that clause, and private equity backed mineral buyers are making crazy offers $11-15k/NMA on those tracts in San Augustine regardless of that clause. So either these new private equity-backed buyers didn’t read that/don’t care, there is a premium in the area which normalizes the cost, or Aethon must have low cost processing, delivering and marketing. Just trying to get to the bottom of it!

What units are you seeing highest offers? Lelia Wynn, KVG, King?

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