funny $hit you see in the field

[Hopperbin]

Thanks for the link oneoff

[OilLady]

I am just stealing posts from the mineral rights forum "americas conversation place" mostly oil and gas, but hope this contributes more.

All DiscussionsMy DiscussionsAdd.Why Your Royalty Should Be Based On Gross Proceeds
Posted by r w kennedy on May 16, 2013 at 6:07pm in Oil and Gas Leasing Help Group
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.The reason your royalty should be based on gross proceeds, with nothing withheld except for taxes is because the ROYALTY owner is not supposed to spend money. Spending money is the job, by definition of the WORKING INTEREST, it's what they do in exchange for a 75% to 85% interest in oil that you the mineral owner already own.
When the lessee/operator asks you to pay post production costs in a lease, he is asking you to spend money. The lessee/operator is asking YOU, the mineral owner to do his (the working interest's) "work", to spend money to capitalize on the production of your minerals. The lessee/producers working interest should be GREATLY REDUCED if you are asked to assume the burdens that rightly belong to the WORKING INTEREST, which is spending money, spending money for gathering, compressing, dehydrating, separating, transporting or marketing. If the operator spends money to buy equipment to carry out these actions, he deducts it from his taxes/ depreciates it as you cannot although you are paying for it.
If you are expected to do the "work" (spending money on the lease) of the working interest, you should be paid like one, considering how little they probably paid you to gain title to your minerals and considering how much of your royalty may go to paying post production costs, it would probably be fair if you had a 10% to 20% working interest in ADDITION to your royalty if they expect you to do their job for them.
For what the mineral owner is giving up in a lease, he should expect a turn key operation, meaning that he should do no "work" which is defined as spending money. The mineral owner/lessor /royalty owners job is to cash checks, not spend money on the lease.
Another reason for the lessee/producer/working interest to want you to pay post production costs is you have no easy way to get an accounting, they take out what they tell you that you owe and all you can do is audit if you have that right in your lease, or sue them, if you are really, really sure you are right and the amount you think you are being cheated out of is greater than the cost of the lawsuit.
Another good reason why your lease should be gross proceeds is because it makes accounting easier. XXX oil was sold at xxx amount times royalty amount - taxes = your royalty. The same may be done with gas and while it could be a little more complicated if divided into it's constituent parts, dry gas, propane, plant products and so forth, it would still be easier to calculate than with post production costs added in. Anything that makes it easier for you to make certain that you are paid correctly is a good thing, isn't it? The lessee / producer/working interest probably wouldn't agree that it would be a good thing that your fifth grader could determine if you were paid correctly.
Let the working interest do his own "work", unless he actually is your brother-in-law and you have a personal stake in making sure he makes more money.

[sumdumguy]

I was hoeing shelterbelt and a very long way
from my Jeep when I look up and see a doe
heading down a furrow straight for me. It was not
phased by my presence. This being very odd, i
decided to try to make my way to my vehicle,
and even as I walked toward her, she was
unphased. Now I felt a bit insecure, so I yelled
out. Then she was phased. She got so scared
she almost ran over me trying to get away, but as
she jumped the fence,I saw a huge, huge purple
lump jiggling and flopping on her side. I suspect
a wood tick was creating the lump the size of a
football. Wish I could have caught her and
helped her out.