Landowners who have minerals underground that fuel companies want to access are often approached with a lease agreement that allows those companies to do so while paying royalties to the landowner for the access to those resources.  These situations basically involve contractual analysis, and this is especially important when disputes arise.  If you are concerned that you are not being treated fairly under the terms of your agreement, seek the help of experienced Texas underpaid royalties attorneys as soon as possible.  In the meantime, below are a few examples of issues that can arise in these situations.

Market Value Controversies

Many lease agreements between landowners and fuel companies state that the landowner is to be paid royalties that are based on the market value of the resources that are taken from the land under which they sit.  Unfortunately, market value can be a moving target, and even if a market value is relatively set for a resource, fuel companies do not always obtain that market value when they sell the fuel.  Therefore, it’s not uncommon for the landowner to be paid royalties based on the actual price received by the fuel company instead of what the market value actually was at the time.

Processing Certain Substances

Certain substances that are taken from under the land of a landowner must be processed before they can be brought to market.  Examples of these substances include propane, butane, hexane and pentane.  These substances are commonly known as Natural Gas Liquids, or NGLs before they are processed into the substances previously mentioned.

Some landowners eventually discover that they are not being paid in full for the royalties they are owed based on the substances that are taken from their land, and instead are being docked for the processing costs that fuel companies must pay to transform NGLs to marketable commodities.

Other Latent Cost Deductions

Finally, there are some situations where the fuel company must pay to have the substances that are accessed transported, processed and compressed.  These are commonly known as post-production costs, and some landowners have these costs deducted from their royalty payments even if the lease agreement states otherwise.

Perhaps the biggest challenge in regards to these issues is that simply looking at the payment may not reveal that someone is being underpaid.  If you have made this discovery, you need the help of Texas underpaid royalties attorneys who have been holding fuel companies accountable for this practice for many years.  Contact Parker McDonald, P.C. today to schedule a free initial consultation.