When negotiating a lease with an oil and gas company, it is important to seek to include a clause stating that no deductions from royalty payments will be permitted for costs. Landowners who leased their property to Chesapeake Energy for natural gas drilling have recently been reminded of the importance of a \u201cno deductions\u201d clause.<\/p>\n
In August 2011, Chesapeake Energy sent notices to royalty owners saying that the company would begin subtracting \u201cpost-production costs\u201d from the prices for natural gas used to calculate royalty payments. Chesapeake claimed that it had always been permitted to deduct such costs, but had foregone the deductions in the past. In the notices, Chesapeake said that landowners with lease clauses prohibiting such deductions would not see a change.<\/p>\n
Today, Chesapeake is involved in multiple lawsuits in different states over alleged underpayment of royalties. One class action lawsuit has been filed by Johnson County, Texas landowners. The royalty owners (more…)<\/span><\/a><\/p>\n","protected":false},"excerpt":{"rendered":" When negotiating a lease with an oil and gas company, it is important to seek to include a clause stating that no deductions from royalty payments will be permitted for costs. Landowners who leased their property to Chesapeake Energy for…<\/span><\/p>\n