- Net Mineral Acre (NMA) — “how much dirt you own the minerals under”
This is pure ownership. It ignores leases, royalties, and production entirely.
NMA = (your undivided mineral fraction) × (gross acres in the tract)
Example: A 320-acre tract where you own an undivided 1/2 of the minerals:
▎ 320 × 0.50 = 160 NMA
That 160 NMA is the same whether the tract is leased, unleased, producing, or bone dry. It’s the raw, traceable foundation — and it’s the one number that exists for every tract you own. Remember that; it’s going to be your common denominator later.
- Net Royalty Acre (NRA) — “how much royalty cash flow you own, normalized”
NRA converts your ownership into a standardized income unit so that interests with different royalty rates can be compared apples-to-apples. The industry standard normalizes everything to a 1/8 royalty:
NRA = NMA × (lease royalty rate ÷ 1/8)
Notice the key consequence: at a 1/8 royalty, NRA = NMA exactly (1:1). If your old producing leases are 1/8 — which is the likely case — then for those tracts the two terms collapse into the same number, and the NMA-vs-NRA distinction is almost academic. Verify it by pulling your actual leases and division orders (the division-order decimal will confirm the royalty), but don’t be surprised if it’s 1/8.
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- NMA measures ownership; NRA measures income. NMA is “acres of minerals,” NRA is “acres of 1/8-equivalent royalty.” A higher royalty rate means more NRA per NMA — the same dirt throws off more cash, so it counts as more royalty acres.
- The 1/8 convention is a historical relic that still rules the market. For ~100 years 1/8 was the standard Texas lease royalty, so it became the yardstick. The danger is that the yardstick is implicit — a quote in “$/NRA” is meaningless until you know what royalty the buyer normalized to.
- At 1/8 royalty the two units are identical. This is why your old producing leases may not need the distinction at all, while your unleased tracts force it.
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- Why leased vs. unleased changes which unit applies
This is the crux of your question.
Unleased tracts → priced in $/NMA.
When minerals are unleased, there is no royalty rate yet — so NRA isn’t naturally defined. You still own the entire mineral estate (the full 8/8): the right to lease, collect a bonus, negotiate the royalty, and the
executive/optionality rights. A buyer of unleased minerals is buying all of that upside, so they value it per NMA. Any “$/NRA” number on an unleased tract is a hypothetical — it only exists if someone assumes a future lease royalty, which is exactly where quotes get slippery.
Leased/producing tracts → priced in $/NRA (and against cash flow).
Here the royalty is fixed by the lease and there’s an actual check stub, so the income stream is what’s being bought. NRA normalizes that income, and buyers layer a cash-flow test on top (more on that below). So yes — your two leased oil-well tracts will most naturally come in as $/NRA.
So your framing — “$/NRA for the leased tracts, a different $/NMA for the unleased” — is correct and is what you should expect to see.