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Deductions Leases

Houston Harbaugh, P.C.

Federal Court In Ohio Rules That Driller Must Establish Marketability of Each Gas Product Under Market Enhancement Clause

Houston Harbaugh, P.C. on

Let’s assume you own 95 acres in Greene County, Pennsylvania. In 2019, you signed an oil and gas lease with ABC Exploration. During the negotiations, you agreed that only those post-production costs which actually...more

Houston Harbaugh, P.C.

Federal Appeals Court Rules That Driller Must Establish Marketability of Each Gas Product under Market Enhancement Clause

Houston Harbaugh, P.C. on

Many Pennsylvania oil and gas leases have what is commonly known as a “market enhancement” royalty clause (“MEC”). These MEC leases typically prohibit the deduction of any post-production costs that are incurred transforming...more

Houston Harbaugh, P.C.

Pennsylvania Superior Court Rules that Royalty Clause Referencing Both ‘Gross Proceeds’ and ‘At the Well’ Was Ambiguous

Houston Harbaugh, P.C. on

Let’s assume that you own 125 acres in Tioga County. In 2017, you negotiate a new oil and gas lease with XYZ Drilling. During the negotiations, you insist on a “gross royalty” which prohibits the deduction of...more

Gray Reed

Deduction Of Post-Production Costs From Gas Royalties – Another Lesson

Gray Reed on

Consider this while celebrating the resurrection of Big Tex: When a lease prohibits post-production cost deductions, can a lessee deduct those costs from a lessor’s royalty? Yes, says Potts v. Chesapeake Exploration, L.L.C. ...more

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