Wondering if Your Oil and Gas Royalty Payments Are Right?
Fighting For Your Rights After Being Exposed To Toxic Chemicals
Oil and gas royalty checks can be hard to understand. Expenses such as gathering, processing, compression, or transportation can show up as deductions. In some cases those charges can be valid under the lease, and in other situations it may be appropriate to question whether too much is being taken out.
A Kansas case called Fawcett v. Oil Producers, Inc. of Kansas shows how complicated these issues can be. The court reviewed whether certain deductions from royalty payments were proper and ultimately sent the matter back for further review. The decision didn’t resolve every question—but it illustrates that sometimes royalty accounting is not always straightforward.
Why It Matters
For many owners royalty income is a vital part of family finances. Deductions, fees, and adjustments can significantly impact the amount of the royalty. But most royalty owners don’t have the time or resources to evaluate whether those deductions line up with their lease.
Some of the common charges that may appear on statements include:
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Gathering or compression charges
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Fuel used during processing
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Treatment or conditioning fees
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Transportation to processing facilities
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Administrative costs
Whether these deductions are allowed depends on the specific lease language, the point of sale, and the applicable law.
What You Can Do
If you’re concerned about what’s being taken out of your royalty checks, there are steps you can take:
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Read Your Lease – Look for provisions on expenses or “net proceeds.”
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Keep Your Check Stubs – Save records of what’s being deducted.
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Ask Questions – Operators can be required to provide certain information upon request.
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Seek Professional Guidance – A lawyer may be able to help with oil and gas issues, and can help you understand whether your deductions appear consistent with your lease.
Take the Next Step
If you’d like to have your lease and royalty statements reviewed, at no cost, call us at 505-235-5977 or complete the contact form.
We’ll set up a no-cost consultation to talk through your situation and help you understand what next steps, if any, may make sense.