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Permalink Reply by adubu on April 2, 2011 at 9:58

I think you also want to see correct royalty interest decimal you are receiving plus correct deductions of severence tax and other cost per lease terms signed and payment up to date current. Totals gross and net for month and year to date. If gas the BTU rating. If more than one company they just pay their WI % and receive their WI based on %  ---all production goes together into the pipeline (gas) and or storage tank( oil, condensate, etc) then peroidically truck picks up to deliver to market

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Permalink Reply by Les Bamburg on April 2, 2011 at 11:04

VSC, for well's with more than one working interest there are a couple of options for each non-operator. 

 

One option is for the owner take their share of oil and/or gas in kind and handle there own marketing.  For oil this can mean arranging for their own truck if trucked from the location. Typically for natural gas there is only one pipeline so each owner would schedule (nominate) the volume of gas they wish to sell.  The operator will maintain an over/short balance for each owner that tracks their cumulative gas takes (sales) versus cumulative entitlement.

 

The second option is for the owner to allow the operator to market their share of oil and/or gas production and receive payment.  This avoids imbalances and each owner receives the same price. 

    

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Permalink Reply by VSC DeSoto South on April 2, 2011 at 18:12

Thank you!

 

Is there somewhere I can read more and become more enlightened about this: "The operator will maintain an over/short balance for each owner that tracks their cumulative gas takes (sales) versus cumulative entitlement."

 

I am told this is the method my operator and the other company are using. The problem is that one says the prod is one amount and the other is usually less by about 1/3  to 1/4.  Although the operator and the other company shoudl have 50/50 split. I would like to understand this arrangement better.

 

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Permalink Reply by Les Bamburg on April 3, 2011 at 7:38

VSC, unfortunately I do not know of a good source.  You may be able search for the terms "Gas Balancing", "Gas Balancing Agreement", "Gas Over/Short" or "Gas Make-Up".  Typically the governing provisions will be an exhibit to the Unit Operating Agreement or can be a separate agreement.  Sometimes the non-operator will sign some form of Gas Marketing Agreement that authorizes the operator to market their share of any production.

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