Market enhancement clause in oil and gas lease concerns landowner
Saturday, June 6, 2015
Shale Play reports that one Belmont County landowner is unsure about the market enhancement clause in a contract. He believes that the market enhancement clause will reduce the amount of his royalty money.
Some landmen are threatening forced pooling as a way to gain access to oil and gas if not all landowners grant access through leases. Forced pooling is allowed in Ohio as a way for oil and gas drillers to obtain the leases needed for a new well site.
Nuttall Legal, LLC, a West Virginia oil and gas lawyer, says a market enhancement clause states that emphasizes how the costs deducted actually increase the value of the gas. According to Pleasant View Management Ohio, a company that provides land management and right of way acquisition services, states that a market enhancement clause “protects the landowner from deductions being taken out of his/her royalty for costs that do not directly improve the price of gas.”
Via: Shale Play > Landowner not sure about ‘market enhancement clause’
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Shale FAQ
How often do royalty payments come?
Depending on the company, royalty payments can arrive monthly or quarterly.
Are my royalty payments transferable?
Yes. If you plan on selling your property, notify the gas company that is leasing your land and your realtor. They will make arrangements to allow the royalty payments to transfer to a different land owner.
What are royalties?
Royalties are payments from the gas company to the landowner as part of a lease agreement. Royalties payments cannot begin until production begins. The payments are dependent upon the market price of the resource.