QUESTIONS ABOUT MINERAL LEASE AGREEMENTS

Can anyone tell me, hypothetically, if a well written cost-free agreement includes severance tax or excludes severance tax for the individual mineral rights owner?

Second question, these cost-free "confidential" pro quid pro agreements between operators and operating interest entities, do they agree to charge, say, a flat percentage of the gross revenue for severance tax to lend legitimacy to the expenses the operating interest charges to their lessees?  

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Permalink Reply by Skip Peel - Mineral Consultant on August 14, 2015 at 15:20

My O&G law firm has a page and one half no cost royalty clause for their custom leases and even it can't relieve a mineral lessor from paying their proportional share of severance tax.  Severance tax rates are set by the state, not by the operator or Working Interest owners.  All parties pay their share.

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