Has anyone had any luck getting Newfield to take out their standard cost clause in their lease agreements where your royalty will be reduced by a litany of costs of production?
Just got a renewal option on my property, Section 36 14 N 6 W but they are saying Newfield does not take out the production cost clause in their leases.
Offering $2,500 per acre for 1/5 and $3,000 for 3/16/
If this was their renewal option from their previous lease, they are not going to change the terms for the renewal. It is their option, not yours, and you really have no input. If it were a new lease, that would be a totally different story.
No, this was not off of the renewal option. We had a 3 year lease with no renewal. We are at the end of the three year lease. They are wanting another 3 year lease.
That then is a different story. I have personally signed leases within the last year with Newfield, and we have added an addendum to remove the pricing deductions. Personally, I would just push harder and tell them you require this before signing. There is a good chance they will come around.
In my last addendum, they had the language that said lessor's royalty shall not bear or be charge with, directly or indirectly, any cost or expenses incurred by Lessee for exploration, drilling, completing, equipping, storing, separation by mechanical means, or development of the leased premises; however, Lessor shall pay its proportionate share of severance and similar taxes based on production and actual costs that are the result of third party arm's length transaction and incurred by Lessee to transport, compress, dehydrate, create or otherwise render the production marketable or to get the production to market from the wellhead point of production.
On another note, how much more should I push on the lease amounts or do are they a fair price from what you know?
The bonus amounts aren't bad. The last couple of recent pooling orders in this Township went for $2750 for 3/16 and $2500 for 1/5.
I don't like the language in your addendum at all. The "however" part of your last addendum relating to "actual costs" leaves you wide open for deductions. This sounds like something written to sound like you are getting no deductions, but you really are.
I appreciate the help. I'll probably take the lease over to an oil and gas lawyer or will that be a waste of money. Should I just say "cost free" or strike the deductions language or is it more complex than that?
Ditto, from me, that "However" just put those charges right back in.
I have gotten them to delete it, however, I usually go around them and try to get a better deal from a third party.