What are average post production costs deducted from royalty checks in Howard Co. TX

[tmacfarm]

what are average post production costs deducted from royalty checks in Howard Co. TX

[Dusty1]

Don’t know where someone could find the data to calculate that sort of ‘average’ number.

You might try asking for folks in Howard County to post what costs are being deducted on their leases to get a feel for it but expect there would be a lot of variance.

[AimeeHess]

There really is no “average” for post production costs. It depends on what post-production treatment is necessary, the terms of the contract the operator made with the transportation company or pipeline, etc. These vary from well to well and field to field.

[tmacfarm]

Thanks so much for the feedback! So I am assuming since the lease says “ the lessor shall pay proportionate costs”, that the 5/8 (62%) deduction off of the 25% royalty is an arbitrary amount imposed by the oil company with no explanation or justification required?

[TennisDaze]

Texas statutes require that an oil company respond to request for information sent by certified mail, including information on the costs deducted. Unfortunately, there is no teeth in the law, such as specifying an easily enforced financial penalty failure to respond. The stature allows the royalty owner to file suite and recover related costs. Texas Natural Resources Statutes - Section 91.401 through 91.507. This statute will not prohibit a company from deducting a lot charges where they are allowable under the terms of your lease. Some companies charge more types of costs than others. I heard that one company is assessing a fee for saltwater disposal costs. Any lease clause must be assessed in relation to all of the terms of the lease. This seems to be an example of why it is important to have an attorney review and advise a mineral owner about the lease before signing. Below is link to a summary by TLMA on the topic. https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=&ved=2ahUKEwifgbT4i5PzAhXAmmoFHfxqBSQQFnoECAYQAQ&url=https%3A%2F%2Fwww.tlma.org%2Fassets%2Fdocs%2FTLMAroyaltyrequirements.pdf&usg=AOvVaw3hshmOr-QH6OArTm2LP4mZ