I have gotten myself totally confused on my royalty rate calculation for a recent lease. I have 13.5 acres in Stephens County at 3/16th. On my lease agreement, it says the total acres are 320, but the section they filed for in their permit is 1280. How do I convert my 3/16th to a decimal? Thank you all so much!
I guess I need to add that within the 320 acres, I own 1/8th. I do not know what that looks like within the 1280 acre section, however.
Allison the formula is your net acres divided by total acres in the section times your decimal royalty ie. 3/16=.1875 1/8=.125. A section is usually 640 acres, so if it’s a 1280 acre unit you only get your share of production from the section you own in. I’m not clear on the 320 acres, is that your total ownership or was the unit originally spaced as 320 Acres?
I believe the 320 was the original spacing. But not sure!
Allison- using a 1280 ac unit, your calculations are as follows: 13.5 divided by 1280 times .1875 or 0.00197754.
If it is two 640 ac spaced units to form one production unit, your interest will be calculated differently due to your units percentage of perforated wellbore feet to the total feet perforated.
Hope this helps. Todd M. Baker
The 320 acre figure on your lease is the gross acres that your 13.5 acres is under. The lease will stipulate the royalty.
Todd, Your two responses left me still a bit uncertain. My lease states 320 acres at 3/16ths. It sounds like the decimal you gave is what I should use in estimating what the well worth range could be over the years?
Do if it is in 640 acres, is it twice the royalty amount, is what I wanted to ask.
If the 320 acres is all contained within the 1280 ac spacing unit, then the formula would be:
(Net acres/1280) * (3/16)
Best,
Buddy Cotten