(usually under a Royalty Settlement Agreement) To determine the "highest-of" value for these leases, the Division compares three different measures of value. (Of the four in the lease agreement, one is currently not relevant). DL-1 Leases are usually under a Royalty Settlement Agreement, but if they are not, the language in the lease agreement determines the valuation method.
Paragraph 15 Value: "[T]he field market price or value at the well of all royalty oil and/or gas"
Paragraph 16(1) Value: The "price actually paid or agreed to be paid to Lessee at the well." This value captures the actual value received. This is the "proceeds" value, and generally the one reported by producers on royalty reports.
Paragraph 16(2) Value: This paragraph talks about "posted price of Lessee in the field" and is not currently relevant, since there are no posted prices in Alaska.
Paragraph 16(3) Value: The "prevailing price received by other producers in the field at the well for oil of like grade and gravity or gas of like kind and quality."