I have an interest in an oil well where I have been offered a “23% royalty” in exchange for some cash if I decide not to participate in the cost of drilling the well. Can you tell me how the 23% royalty would be calculated if the well is successfully completed? I assume I would be getting 23% of the income allotted to my share of the net revenue interest. Is that correct?
WHY would you want to be tricked into Participating in something you don’t know much about?
First, what exactly do you own? Do you own minerals which are not under lease are participating as an unleased mineral owner? Do you own an interest in a lease of someone else’s minerals and so are a working interest in the existing well? Then you need a written offer setting out the details of what is being offered. Then you should have an oil and gas attorney in the state where the minerals are located to help you interpret the offer and its effect.
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Mbrown- to answer your question, take your net acres, divide that by the total acres in the unit times your royalty percentage. Example: 5 acres in a 640 unit with 23% royalty is 5/640 x .23= 0.00179688. There can be other parts of the equation depending on what type of unit there is, but that is how it is figured.
Thank you Me. Baker. That is the asnwer I need.