Distribution of Royalties

#1

I just have a quick question regarding how royalties are paid. My mother, her sister and two brothers owned the mineral rights on our farm and my mom owned the surface rights. In my family there are 4 people with rights, my aunt’s portion went to her son; one of my uncle’s had one child and the other uncle had 2. So, in total there are 8 people with mineral right ownership on our farm. The oil company gives the 1/8 distribution. My question is how does the distribution work? Do my siblings and I divide one fourth of the 1/8 distribution and my cousins get the other 3/4ths? I thought that the 1/8th that the oil company pays to the royalty owners was distributed equally between all owners. Can someone explain this to me?

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#2

I forgot to mention that the cousins are getting checks about every 3 months and my siblings and I might get one a year. Am I missing something?

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#3

We are in a similar situation. My dad and uncle had equal portions. My dad had 9 kids, one of his brothers had 3 children. Nine of us children split my late dads portion 9 ways. My cousins split their late dads portion 3 ways. Lets say their dads portion is $300, they EACH get $100 because their is 3 heirs to their dad. My siblings and I split my dads $300, we each get $33.33. So because your mom had more kids, each your portions is smaller because it is divided by more heirs of your mom.

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#4

Thanks. This stuff is sooooo confusing!

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#5

It would depend upon the wills or probate of each of the four original siblings and who they left the rights to. If directly to their own children, then each original acrea splits according to how many children. Lets assume there were 16 acres at the time. Each original sibling would have had four acres each. Aunt’s four acres went to her son. Uncle One left his four acres to his son. Uncle two left his four acres to two children, so each one has two acres. Your mom’s four acres split between you and your siblings, so whatever that portion is. The equation for royalty payments is: Net acres/spacing acres (actual) x royalty x % perforations in your section. This is for Oklahoma. Texas is similar, but the last term may be based upon feet.
If you have a horizontal well that is only in one section, then the last term is equal to zero.

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#6

If no Will, Trust or Transfer on Death Deed; you are looking to the intestacy law of the state where the minerals are located. In most cases you are looking at descendants (in legal terms “issue” which includes grandchildren etc.)

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