Basis of interest

our deed says - ... an undivided one-thirty-second( 1/32) interest (same being 1/4 of the usual 1/8 royality) ... We expected our part to be based on 1/4 of the now usual 20% or 1/4 of 1/5 which would be 1/20 instead of 1/32. But we got the division orders from Conoco and our decimal is based on 1/32 Are they correct? Since the transaction was between our father and our uncle we know their intent was for each to get 1/4. But now our uncles heirs will get the difference created by the difference between 12.5% and 20%. Are we dead in the water?

You need to know what the oil and gas lease of record on your property says. Sounds like it is for 1/8. It doesn't matter if the going rate is now 1/5; what matters is what the lease on your property says. If it is an old lease from long ago, and Conoco is simply drilling a new well, then what they have done makes sense. You would have a 1/4 interest in whatever the lease royalty states.

From what I have learned here, documents must be taken as a whole and excerpts are of no use in giving a well considered opinion. If I understand your question correctly, you want to know if the deed limits you to 1/4 of a maximum of 1/8 royalty rather than 1/4 of whatever the royalty actually was in the lease. I think you may need a lawyers opinion of the entire document. I don't want to pry into your privacy. I will point out that a deed is a searchable document [public record], that you already have a lease, and I can see no reason you can't put your cards on the table, give the whole document verbatim and possibly one of the lawyers or experienced mineral managers in these forums will comment and save you a trip to the lawyer, or confirm that that is where you need to go.

Thanks for the info and advice - will get back to you with final outcome

Your Division Order decimal is not only based on your royalty % but also on the well spacing.

For example and this is only hypothetical: if your interest is in 320 acres and the well spacing is 640 acres, then your decimal is reduced by half before your royalty % is applied.

Sorry to break this to you, but from what you shared, Conoco is correct. The limited language that you shared implies that your interest is a non participating royalty interest and that the NPRI value is set at 1/32. If the intention was for you to have 1/4th of the royalty, it would say so. This has gone before the Texas Supreme Court before and the outcome was clear.

You have 2 issues in your question: (1) what do you own; and (2) what royalty are you entitled to. First thing to know is what you own. You could own (1) the minerals; or (2) a right to receive a portion of the royalties from the mineral production (just one of the rights that go along with the mineral estate, albeit a very important one). The language that you’ve quoted from your deed sounds like you own only a royalty interest and not the underlying minerals. However, if the deed was drafted by someone that didn’t know what they were doing, they may have just used the wrong language in the deed. You need to engage an experienced landman or o/g lawyer to get a certain answer to your question.

thanks to one and all

Barry Hughey said:

thanks to one and all