I have issues with this statement - I think it is too broadly written:
(d) The royalties payable under the Lease will be free of all production and post-production costs. However, Lessor’s proportionate share of any such costs that result in enhancing the value of the oil, gas or other products to receive a better price may be deducted from Lessor’s share of production so long as the deductions are based on Lessee’s actual costs and the total amount of the costs do not exceed the amount of the enhanced value.
These are the reasons I think it is too broadly written:
So, if the product was enhanced, how do we know what the increased value of the product was and how do you know we received royalty for that? I certainly could not tell if A Company paid us for that enhanced value on our royalty statement - and if it was written into any of our leases - it still doesn't prove that we received royalty on the higher value. I guess that is the point I am trying to make. I suppose we could blow my questions off, but these charges and higher value in product from enhancements add up.
Thanks Buddy! I'd send you a copy of the lease to read for me and be proud to pay you for your services, but at this time, I am not privileged to do so.