# Calculation of NRA with variable decimal

My family has recently inherited mineral rights in New Mexico that originated in the 1940-1980 range with grandfather. His records were meticulous, but since then not so good. I have a landman appraisal from 1980 and it indicates in certain instances two different decimal interests in the same legal descriptions, but applying to different depths, such as .003485 ORRI to 4,000 ft and .0697 ORRI below 4,000 ft. on a full section of 640 acres of federally leased property. What are the Net Royalty Acres in this case? 640 x .0697 x 8 = 356.86 NRA <<>> 640 x .006485 x 8 = 17.84 NRA. Thank you in advance

Yeah, you would have 17.84NRA limited to depths from surface to 4000’ and 356.86NRa limited to depths below 4000’. For the decimals you listed. I mean yikes 356.86NRA is a crazy amount in one Fed section.

Your ORRI is tied to the lease(s), so you’d need these leases to still be in effect after for a long time or else its in the wind.

It seems like this points out another limitation on NRA calcs to truly get to the 3 dimensional nature.

In the vast majority of cases, things aren’t depth severed. IMO, most people on any side of the business are smart enough to ratio down NRA pricing/expectations to fit how much of the productive column is actually owned. In SE NM all of the value is below 4000’, so basically you would have 356.7NRA. If you are on the shelf and in the Yeso then you pretty much have 17.8NRA and then some crappy Morrow rights. If you are in the SJ Basin, then have fun.

I get what you are saying. IMO your big takeaway should not be A + B > B tricks when we know that the two Bs are not the same thing.