Accounting & Taxes

Accounting and Taxes
1

I am having trouble reconciling the owner’s decimal interest given by the oil company.

I am an accountant and have worked for oil companies for 6 years but have never done any pooling.

As I understand the method now you:

use number of mineral acres owned

divided by the total acres of the lease or the unit. (I think this is where my mistake is from.)

I have the TX form P12 when they drilled the wells. Do I use the total given there?

divided by the royalty % times sales price.

I am most interested in my family’s lease where we have over 200 acres with at least 40 joint owners and three different wells.

I strongly suspect we are not getting our share because within the last two years the oil company has sold over 6 million dollars of oil & gas and the family has not received much over 100 thousand if any over. We are getting 20%.

This activity is located in Montague County, Texas.

2

This is how I do it. May be an easier way.

Total Gross acres in your tract in the unit (from Permit or Declaration)

/ Total Gross acres in the Unit (from Permit or Declaration)

x % ownership (Net Mineral Acres/Gross acres (use the tract of land you have total here whether it is in unit or not)

x lease royalty

= DO Royalty.

If you have multiple tracts in the unit perform the same calculation for each and add them up.

3

Lance,

Please write me at cloisrich@sbcglobal.net