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# Royalty Acres vs. Net Mineral Acres

In selling 2.5 NMA, subject to an existing 3/16 lease, someone recommended basing the value on net royalty acres. Can anyone explain what that means?

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Net royalty acres is how 99% of buyers value minerals since lease royalty rates can vary. At 3/16, 2.5 NMA is equal to 3.75 NRA.

Dear Ms. Willis,

The way that I was taught to determine royalty acres, was that there were 8 royalty acres per mineral acre.  Therefore the total royalty acres under your 2.5 mineral acres would be 20 royalty acres.  You own 3/16 of the royalty under those 20 royalty acres, so your net royalty acres would be 3.75 net royalty acres (20 x 3/16).

Best wishes,

Buddy Cotten

Mineral Manager

So would 25 min acres at .25% equal  100 net royalty acres?

It would be 50 net royalty acres. The formula is:

Net mineral acres * 8 * royalty = net royalty acres

So,

25 NMA * 8 * .25 = 50 NRA

Thank you,  It's been a long time since I did any real math   I got an offer once for net mineral acres.   I did not sell.  I find it foolish to sell minerals in the first place.     I thought the person was pulling my leg. He probably thought I was a dunce too!   lol

Dear BP,

Before anybody shoots at us, your equation is almost correct.  The correct equation is:

Net Royalty acres = Net mineral acres x 8 x (royalty-Non Participating Royalty Interest).

A Non Participating Royalty Interest in this case is hereby defined to be any burden to the royalty interest.

Best regards,

Buddy Cotten

Mineral Manager

Thank you very much. I see your responses in this forum a lot and you always explain things clearly.

I suggest defining your sale in net mineral acres and then agreeing on a formula to reduce the per acre price to take into account royalty burdens like NPRIs. In my view, an NPRI burden should not reduce the sales price dollar for dollar, because the ability to receive bonuses and the executive rights are worth something.

I have bought and sold lots of mineral and royalty interests and have never used a royalty acre as a basis for computation of consideration.  Perhaps others have, but not me.  For the most part, in my area of activity, a royalty acre is almost an term in antiquity.