What deductions or costs may be taken in computing state royalty?
The State Mineral Board has over the years recognized the applicability of certain deductions under most of its lease forms. Generally, they include reasonable transportation costs for oil and gas when the product is delivered from the field to a point of delivery outside the field in which the production occurred and reasonable gas compression charges where gas must be compressed for insertion into a sales line. In addition, the lawful amount of severance tax allocable to royalties and paid to the Department of Revenue may be deducted from royalty payments. See Section 5 of the publication for further explanation. See Appendix C for royalty clauses in existing state leases.
