Case Study: Royalty Payment Planning

We worked with a client to review all of their oil and gas lease forms and marketing scenarios with a view to addressing any liabilities relating to the valuation of royalties paid by the client. We reviewed all agreements related to purchasing, gathering, compressing, processing and transporting, invoices for costs assessed within these agreements, check slabs and division orders.  We reviewed schematic diagrams showing the physical flow and treatment of the gas and interviewed representatives of the accounting, marketing and land departments. We also drafted a lease form that addressed the deduction of post-production costs and statutory reporting requirements. Based on information we obtained in our review, we were able to assess our client's royalty valuation liability.