UNAUTHORIZED DEDUCTIONS FROM A LESSOR'S ROYALTY PAYMENTS.

In Louisiana, a lessor specifically requires that lessee is authorized to deduct from the wellhead price/M cu. ft. only production, ad valorem, and severance taxes to arrive at the royalty owners payment. Can the lessee legally make deductions for fuel and gathering in defiance of the terms of the underlying lease??

The lease royalty payment clause follows:

"27. Lessor's royalty shall be calculated free and clear of all costs, expenses and deductions for exploration drilling, development and production, including, but not limited to the costs of transportation, dehydration, storage, production-related compression, separation by mechanical means, and stabilization of hydrocarbons at the well, but said royalty shall bear its proportionate share of ad valorem, production and severance taxes."

 

Hill

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Permalink Reply by william j. hill on October 5, 2013 at 13:37

Dion

It would appear to me that some of the Louisiana residents ( and voters and royalty owners) would get to their Congressmen and make some changes down in Baton Rouge!! Way overdue!

It is unbelievable that an OGL clears Louisiana to be used in that State containing provisions that are not even in the contract. Usually something not agreed to is void. Note the Court Cases decided in favor of the defendant!!On top of that, the State of Louisiana recognizes and enforces the law. Somebody is asleep!

B.Hill

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