No Double Deductions

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No Double Deductions

 

Some lessors are wary of oil patch accounting.  These types of lessors sometimes request a no-double-deduction covenant.  An example is:

 

No Double Deductions. Notwithstanding anything contained herein to the contrary, there shall be no duplication of expense deductions for any purpose under this Lease, and if the proceeds from the sale of oil and gas (and the products extracted therefrom), or the fair and reasonable value thereof, represents the sales price or the value of such products after processing, treating, transportation or other charges have been deducted, then the deduction of such charges shall not again be made for any purpose under this Lease.

Copyright 2011 by Edward G, Hawkins. All rights reserved.