How "Cost Free" Royalties are determined

We live in the Keithville area where many landowners have signed leases early; with bonuses ranging from $8,000 to $16,000. There are still a few of us who have recently been approached with an offer of $18,000/net acre and 25% "cost free" royalties. These royalties are based on the price of gas at the wellhead. Can someone explain how these are determined?

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Permalink Reply by CONDONDANIEL on August 7, 2008 at 3:52
Cost Free is the way to go on a lease and be sure you have a similar clause to the following in your royalty section of the lease. "Lessor's royalty herein is free of all charges and cost whatsoever including, but not limited to, productions, comprression, cleaning, deydration, metering, detoification, transprotation, accounting and marketing, execpt that the Lessor's royalty will be responsible for it prorated share of all taxes imposed on serverance or production by any municipal, parish, state or federal agency."

This is not in the standard lease.

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