Many landowners across Pennsylvania are experiencing sticker shock upon opening their first royalty statement. They have waited months, often years, to receive their first royalty. As they open the envelope, they envision paying off that mortgage, replacing that old tractor, finalizing their children’s college funds or possibly even retiring. This excitement soon evaporates as they read the royalty statement in disbelief.
Although they negotiated a 17 percent royalty, the payment itself is nowhere close to that. Instead, there are deductions for things such as dehydration, compression, gathering and marketing, which reduce the payment by thousands of dollars. They are frustrated, angry and confused. Can the gas driller deduct these costs from my royalty? The answer is yes, but that may soon change.
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