Hey folks, I was hoping a someone familiar with minerals in Texas could help me out. I have always managed the mineral interest for my family because I am familiar with title work in Oklahoma as I used to be a landman in Oklahoma. However, we have been receiving offers on our minerals throughout Texas in which Im completely unfamiliar with. How do I go about determining our net mineral acreage or net royalty acreage if the only information I have is the decimal interest from Division Orders and Mineral Tax Rolls? Thanks!
The “Ask nicely and you might get lucky” Method
The first thing I’d do is ask very, very nicely to the owner relations department (of the operators of the wells on your land) if you could get a copy of just the portion of the title opinion pertaining to your interest. That you’re trying to clean up your files and would appreciate any assistance they could provide. They might be willing to provide just that, but it might take some time to go this way.
The “DIY” Method
Second, this won’t always work since older data can be sketchy and some units are plain weird, but I look up the unit for the well the division order is associated with by searching RRC files. If I have a royalty decimal of 0.00039 and a unit size of 320 acres, there is 1 NRA somewhere in that unit.
I won’t know the legal description or royalty, but I’ll then go to the county records and see if I can find a lease or any legal filing that mentions acreage in that section related to the mineral owner. If I can find a lease, usually the royalty % is on the version of the lease filed with the county which lets me convert NRA to NMA.
Note: this all starts to get messy if the interest not a standard mineral interest, say if you have a bunch of ORRI or whatnot around the state. You could at least calculate equivalent NRA though.
Usually these things will get me enough information that I can go back and check other wells in the same area (if there are any) and fill in more blanks, or use other wells payment stubs to give more clues to cycle back through the RRC files. It’s an iterative process that can be time consuming but I look at it like I’m playing sudoku or those grid-based logic puzzles with the clues.
I’d be curious to see what other methods people here have! Let us know if you need any help.
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Fwiw, almost anybody who is making you an offer is going off the “DIY method” for starters. Decimal x gross acres x 8 = nra. This is why NRA is the standard deal. It normalizes interest and makes it easy to make a scalable offer as the mineral tax rolls are readily available. Assuming anybody ran title it would be after you signed a PSA.
You can find the gross acres that correspond to your wells/decimals at RRC, I would normally do that digging through the permits and wellfiles for the wells. RRC sucks but that’s the breaks.
Seems better than making a 100 instrument run sheet through court records.
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This is true! (on all points)
Until recently I thought most offers were also presented in NRA until I’ve recently had several people show me NMA offers they’ve received. They come across real formal and as if they have title opinions (or something) until you realize they’re just making an assumption on royalty % to get to NMA. I was most surprised when I saw a NMA offer from the same company who operated the well. My initial thought was “Oh, they must be taking advantage of their detailed records to make NMA offers. This is probably a reliable NMA value.” Nope, after more digging, they were assuming 3/16th interest while this lease was an older 1/6th rate. Trust nothing.
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Keep in mind that if you are selling on NRA based solely on a DOI and producing well, then you may be paid too little. For example, if the lease does not hold all depths, then you have open minerals for lease and production and are not being compensated for that. You may also own additional acres which are not included in the well, even if the lease is holding all of the original acres because there was no Pugh clause. If you own 2% of 640 acres = 12.8 acres and only 320 acres are in the unit, then the NRA will only reflect 6.4 acres and not the other 6.4 acres which can end up in a different unit and well. It is important to understand what minerals you own and what portion of those minerals are either under lease or included in a well. Be sure to have a clear legal description of what is being sold. If you sell your minerals in Section 10 and the contract includes “and everything owned within the county” or similar language, then you are not being paid for minerals in other sections.
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Thank you all for your input!
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