The California Stipulation Governing Payment of Nonparticipating Royalty Under Segregated Tracts Covered by one Oil and Gas Lease is a legal agreement that outlines the specific terms and conditions for the payment of nonparticipating royalties in relation to oil and gas leases in California. This stipulation is designed to ensure fair and equitable distribution of royalties among various stakeholders and protect the rights of nonparticipating royalty owners. Under this stipulation, there are different types of payment structures and provisions that may apply to segregated tracts covered by a single oil and gas lease. Some key types include: 1. Proportionate Sharing Model: In this model, the nonparticipating royalty owners are entitled to a proportionate share of the overall royalty payment based on their ownership in the segregated tract. The percentage of ownership is typically determined by the size or acreage of the tract held by the nonparticipating royalty owners. 2. Enhanced Sharing Model: Under this model, the nonparticipating royalty owners receive an enhanced share of the overall royalty payment, which may be higher than their proportionate ownership in the tract. This model is often used to provide compensation to nonparticipating royalty owners who might be impacted more significantly by drilling activities or other factors. 3. Minimum Royalty Guarantee: The stipulation may include a provision for a minimum royalty guarantee, ensuring that nonparticipating royalty owners receive a certain level of payment regardless of the actual production or sales of oil and gas from the segregated tract. This provision provides a level of financial security for the nonparticipating royalty owners. 4. Offset and Deduction Mechanisms: The stipulation may also include mechanisms to account for any offset or deduction of expenses incurred in the production and development of oil and gas. This ensures that the nonparticipating royalty owners are not burdened with excessive costs and that their royalty payments are not unduly reduced. It is important to note that the exact terms and provisions of the California Stipulation Governing Payment of Nonparticipating Royalty Under Segregated Tracts Covered by one Oil and Gas Lease may vary depending on the specific lease, the parties involved, and the governing regulations. Therefore, it is crucial for all parties to carefully review and understand the stipulation to ensure compliance and fair treatment in relation to nonparticipating royalty payments.