Royalty that slides with oil price can add value to producing fields

David Mercier California State Lands Commission Long Beach Sliding Scale Royalty Rate Sensitivity [142,813 bytes] Business calls for cooperation when it comes to creating an economic pie and competition when it comes to dividing it up. It is not Leadership Secrets of Attila the Hun or St. Francis of Assisi.1 In negotiating a profit sharing agreement, the goal is to compete with but not destroy the opposition. If a high royalty rate destroys the pie (or field value), nothing will be left for either producer or royalty owner to capture. This results in a lose-lose situation. By the same token, it doesn't make sense for the royalty owner to r...

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