Division Order calculations

I have noticed that 2 different companies use different formulas to calculate my royalty interest. This is in Ward Co, I have a 1/6 interest in both wells, 25% lease royalty, each well has different NPRI’s. But the first company multiplies the NPRI’s times the lease royalty in parentheses, the second company doesn’t. Since this affects my royalty interest I would like to know which one is correct or if the terms of my lease would have caused the difference in calculations.

Sec 214 Royalty Interest in Unit Tracts 6A and 6B: (1/6 x [1/4 - (61.298666%*1/4)]) = 0.0161253 Track Participation in Hornsilver Unit: 81.56/648.92 = 0.12568382 Royalty Interest: 0.0161253 x 0.12568382 = 0.0020267526

Sec 213 Royalty Interest in Unit Tract 2: 1/6 x (1/4 -(.0785375)) = 0.02857708 Track Participation: 40.63/573.98 = 0.07078644 Royalty Interest: 0.02857708 x 0.07078644 = 0.00202287

Sec 213 if calculated like Sec 214 Royalty Interest in Unit Tract 2: 1/6 x (1/4 -(.0785375*1/4)) = 0.038394271 Track Participation: 40.63/573.98 = 0.070786439 Royalty Interest: .038394271 x .070786439 = .002717794

I would be appreciate anyone’s help.

Both could be correct. There may be differences in the wording of the NPRI deeds for each tract. Some NPRI are fixed as a set number, such as 1/64 = 0.015625 and is deducted from your royalty. Other are ‘floating’ based on the royalty rate of the lease - such as 1/8 of the royalty rate. In that case, if your royalty is 1/8, then the NPRI is 1/8 x 1/8 = 1/64 and if your royalty is 1/4, then the NPRI is 1/8 x 1/4 = 1/32. All of these may be affected by the chain of deeds through the original grantor of the NRPI. Generally, the NPRI will be factored by your fractional interest in the minerals. However, within the deed chain, someone could have sold partial minerals and either retained all of the NPRI burden or have made the grant subject to the buyer taking on all of the NPRI burden. You need to trace the deed history of each tract and in particular see the wording of the original grants of NPRI to figure this out. Finally, there have been court cases about the interpretation of NPRI language and resulting burdens.

Could be pooled vs allocation issue. Pooled wells come out to a similar number to allocated ft of well bore but they are calculated with different sizes which can lead to slightly different numbers.

Thank you for your input.

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