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Oil/Gas/Oil and Gas Lease


Legal Description of land: Section 10, Township 12 North, Range 5 West, and containing 160 acres, more or less

Lease terminology: "To deliver to the lessor free of cost, in the pipe line to which it may connect its wells, the 3/16th part of all oil (including but not limited to condensate and distillate) produced and saved from the leased premises."

Question 1: Does the above phrase state that the lessee is willing to pay royalties to the lessor "at the well" or after the cost of transportation?

Lease terminology: "To pay lessor for gas (including casing head gas) and all other substances covered hereby, a royalty of 3/16th of the net proceeds realized by lessee from the sale thereof, less a proportionate part of the production, severance and other excise taxes and the cost incurred by lessee in delivering, processing, compressing, transporting, or other wise making such gas or other substances merchantable, said payments to be made monthly."

Question 2: Is the above terminology something that you would recommend a lessor agreeing to? What is a "proportionate part of the production" based upon and who determines that basis? I am  not comfortable with the above paragraph's wording as I read it that the lessee has a lot of control over the "proportionate part of the production" costs and the lessor has none, but I am also not familiar with oil and gas leases, maybe the above is fair and normal.

Question 3: Can you tell me anything about oil and gas prospects in the described area and offer any general advice to potential lessors?

Question 4: If we counter their offer, is it recommended to simply make changes and initial directly on their originally offered contract?

Thank you.

The information you stated under the term 'Lease terminology' is not conclusive in itself to determine whether the royalties to be paid will be paid 'at the well [without transportation, compression, etc. charges] or 'after the cost of transportation'.  Without reading the full lease it is difficult for one to understand what a portion of a clause within the lease provides.

In regard to your Question 2 above, yes, the terminology you provide is standard and in the past 4-5 years even when a lessor is able to include a special provision that disallows the Lessee from deducting compression and transportation costs from their proportionate share of the royalty, due to the fact that most gas has to be treated before it is ready for market, the opinion has been that the Lessee can deduct this from the lessor's royalty because it is incurring additional costs in order to receive a better price at market.

As for Question 3, I would have to do some research in this particular area to determine what the well and lease activity is.  The information you provided does not include the county or state your property is located.

In regard to your Question 4, I do not recommend you making any changes to the lease and simply initialing the document. If you would like to counter with different terms, then I would recommend you contacting the company who is attempting to take this lease from you and speaking with them directly.  They would need to prepare a new lease, with the new terms if they agreed to accept your counter offer.

In my opinion, it's always best to communicate directly, in person or by phone, with the company you are trying to negotiate with.  

Best of luck.  


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Laura M. FitzGerald, CPL


PLEASE READ CAREFULLY BEFORE SUBMITTING A QUESTION. I can answer all questions related to oil and gas ownership, mineral interests and working interests concerning the leasing and selling of your minerals, any questions concerning pipeline ROW's, units with the Louisiana Department of Conservation; pooling provisions, depth limitations, vertical or horizontal pugh clauses; and oil and gas terminology. I can offer assistance in negotiating for leasing your property, assisting in locating owners of suspended funds or to receive the best offer for your oil and gas interests, should you desire to sell. I am only able to answer questions regarding oil and gas leases, minerals, royalties, or offers to purchase mineral/royalty interests if I have complete information. Please provide a full legal description for your interest(s). If the question pertains to a lease, please include all terms of any current (or desired) lease offers, including lease bonus amount, royalty and lease term. If the question is regarding a mineral or royalty interest offer to purchase, please provide the offer amount, date of offer, other offer terms, and further details on the mineral/royalty interest, such as lease terms, and if producing, the average monthly income. Since I receive numerous inquiries daily, I am only able to answer your questions efficiently and effectively if I have complete information. I must decline any questions submitted with incomplete information. If your question is non-technical in nature and you simply need assistance understanding an oil and gas matter, please submit your question with as much information and detail as possible. Any background information that has led to your question is also very helpful.


I have over 34 years experience as an Independent Petroleum Landman. I became a Landman after working as a paralegal for Oil & Gas Attorneys for 8 years. My first 2 years were spent specializing in Well History and Research with the Louisiana Department of Conservation, then moving into clearing title defects and handling title curative for oil and gas properties for the next 6 years. Subsequent thereto, I handled title issues, buying oil and gas leases and settling surface damages. I also acquired acreage for drilling prospects in excess of 10,000 acres. I also became a mineral/royalty owner commencing in 2004 and have found that I can help many people when they have reached the point in their lives they feel converting their minerals or royalties into a cash asset benefits them.

American Association for Professional Landmen, ArkLaTex Assoc. of Professional Landmen, and Dallas Association of Professional Landmen (DAPL), Certified by the Women's Business Enterprise National Council (WBENC)- South. This certification is one of the most widely recognized and respected certifications in the nation. This designation is reserved for only those women-led businesses that exemplify the characteristics of integrity and professionalism to which the WBENC adheres to so strictly.

Attended LSU, became a Certified Professional Landman in 1994; Notary Public with dual authority in multiple parishes in North Louisiana; Bilingual in English and Greek

Awards and Honors
Expert Oil & Gas Professional assisting attorneys representing landowners. Involved in 2 lawsuits and both suits were awarded to the landowner. Ilios Resources, Inc. has been awarded the Best of Shreveport Oil and Gas Mineral Buyer Award for 2016, 2015, 2014, 2013 and 2012.

Past/Present Clients
Consultant Landman for Texas Oil & Gas (TXO Production Corp.), Anadarko Petroleum, Comstock Resources,Independent Geologists, Pipeline ROW Clients, and Oil & Gas Attorneys. For the past 5 years my practice is primarily an advocacy for the landowner. I also assist royalty owners recover suspended payments or incorrect royalty payments, or sell their mineral or royalty interest.

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