Or here’s another question: on the check detail Merit shows production per tract, not per section. Could that be why I’m confused? This is the only royalty statement I’ve ever seen & need to understand it. We have some other leases and will eventually have those statements for comparison so I also want to know will each company state production a different way or is there a standard method? Hope I’m not being too dense and wordy here, Michael! Thanks for trying to educate me 
Pam, don’t feel dense this stuff can be hard to understand. My experience has been more recent and has been with complete 640ac. units so that’s why I used that example. But it still boils down to what your percentage of the ownership is. The units are smaller in your case since they are probably straight hole wells and don’t need the space of a horizontal well but the same principal still applies. If the tract or unit is 40 acres and you own 10 of those acres you do the math the same way. Your royalty percentage of 1/8, 3/16, 1/4 or whatever will remain the same but the number of acres that you own in a particular unit will determine how big your piece of the pie is or what your net royalty is. It would be applied equally only if you own the same amount in each tract and your fractional royalty is the same in each case. Hope this helps.
Michael, yes that does help & thank you. Think I’ve finally got it straight!
Oh Pamela, the tract and the spacing are two different things. Just in case I didn’t make that clear. According to my allocation (and understanding) the Springer Unit produced 47,936 bbl’s in April
Yes lots of action around there, Debby. Can’t answer your other questions but some of these guys on here probably can. Best Wishes!
Lynden, OK, I looked up Venn diagrams so now I know what that means
I don’t get how they relate, tho? I think maybe I didn’t write my question clearly. What I’m trying to understand is how Merit figures the RI. From our Great-Aunt’s Final Decree, I know where we have RI with Merit and have plotted it. From the same source I know what our RI is throughout. I had expected to see that constant RI applied to each land description. However, on the check detail we see different decimals applied to different “Tracts” [5 tracts in the Hart Unit, 3 in the Springer]. These Tracts, I think, are what are confusing me. I have a map of the Units & see how they have it broken down into, it looks like, 16 squares per section, and call these squares “Tracts”. If we own in a whole tract they apply the decimal I expected to see. If we own in 1/2 a tract they cut the decimal in half. Am I correct in my understanding of this? Is this the correct way to figure RI? And, is this the way all Oil Co’s do it-the 16 tracts per section, etc?
Michael, so in your example, the 640 acre unit is 1 section? The 1/4 royalty is what you accepted to lease?
So in section 21 4N 4W we own in 150 acres. The decimal on the Final Decree from 1966[listed under “producing royalties”] I’m assuming is the result of the same calculation as in your example & is our net royalty. So then should it not be equally applied in all of Merit’s “tracts” that we are in in Sec. 21 4N 4W?
Michael, when a drilling permit states the “spacing”, is that how the “unit” in your example is established? So the net royalty is partly based on that unit size? So if Merit reports production on 40 acre tracts, does that mean the original drilling permit stated 40 acre spacing? I know that when the Units were formed the “tracts” were mapped & made part of the formation order. So no new drilling permits, with different spacing, were ever applied for? And our net royalty with Merit is based on 40 acre units-is that correct?
Lynden, could you please explain that last? About the tract and the spacing being 2 different things-thanks.
Pamela, My interests are in 28 4N, 4W so I have looked at the same thing you are looking at and Michael does a pretty good job of explaining it. In my case most of the leases were for spacing of 40 acres of which my grandfather owned 27.5 acres. So that is the venn diagram reference, the overlap. Of his 150 acres, 27.5 was in the 40 acre spacing for a particular well so he got .6875 (27.5/40) x .125 or .0859. Then for me it was divided by 5 for the 5 heirs and so on.
I don’t know why the tracts are sized the way they are but the do serve a purpose as each tract in the unit gets a certain percent of the units production. I see where the Cully Reeves B-3 gets .35711 percent of the NE Purdy Springer production but only .00634 of the Purdy Hart.
Pamela,
Tract is usually a reference used in deeds/probates that shows where your particularly mineral interests are located within a section.
Spacing is regulated by the Oklahoma Corporation Commission. It changes for each well. It can be 40, 80, 160, 640. Most of the time this spacing is call a unit, but you can also have a 40 acre spacing for each well in a larger unit. In that case you would get paid a royalty on what interest you have in that 40 acre spacing and also get paid a royalty on what interest you have in the larger unit.
This is why you divide the amount of acres you have in that “spacing” by the spacing for the well to get a % of the unit. Not all of your “tract” may be in that “spacing”.
Hope that helps
Lyndon, I see that re: Cully Reeves, but there’s also Reeves Bray and another, just Reeves. All 3 are listed as being in 4 of the tracts we get RI from, in both Units. I can’t make sense of the “tract percentage participation” column. In our case, we just have the Probate statement that our great-uncle & his wife had 11/15 of 1/8 RI in 6 different land descriptions in sec 21-4N 4W. She gave her half to her relatives, he gave his half to his 13 heirs [they had no children, just plenty of nieces/nephews!], our father being 1 of those 13. I now know we get RI from Merit in all those areas, some Hart, some Springer, some both. There is 1 area [tract C-4 in Hart] that I don’t see a “Reeves” on in that original listing. So I still don’t have a complete picture.
Thank you Darla & Lynden. All this good info helps!
The spacing is what the oil companies asked of the OCC when they prepared to drill these wells back in the 50’s. The wells I have an interest in are based on 40 acre spacing. These well spacings were based on where the companies wanted to drill. The Purdy Hart Unit was formed in 1961 (I think) and is a simple grid and though they are also 40 acres per tract they don’t necessarily mirror each other.
The tract percentage participation column is in your example of B-3, .35711 percent or .0035711. All of those numbers from tract YY-1 to V29 should add up to one. So I think in April the Springer Unit produced 47,936 bbls and B-3 was allocated 171.18 barrels. (These Units were formed so they could maximize production over time by waterflooding and CO2 injections)
As far as C-4, that is just a naming convention. I think the drillers can name it whatever they want. So Leo may have been the name of the surface owner where the well was spud.
Rick, is that link messed up? It got me to the Tussy Sand Unit unitization, not Purdy Hart?
Pamela,
You are not dealing with a conventional well spacing unit. This is a Joint operating unitization for a group of well in a couple of sections.
Here is the Unitization plan on it. Pages 43 and 44 is a drawing and percentages assigned.
http://imaging.occeweb.com/OG/Unitization/00000001/OCC_OG_055R2BJ_2…
I guess I looked at someone else’s post when I was trying to find which unitization you were talking about.
Here are some of the documents
http://imaging.occeweb.com/OG/Unitization/00000001/OCC_OG_3D3DBMP_2…
http://imaging.occeweb.com/OG/Unitization/00000001/OCC_OG_37K5AAA_0…
http://imaging.occeweb.com/OG/Unitization/00000001/OCC_OG_055R6R3_2…
http://imaging.occeweb.com/OG/Unitization/00000001/OCC_OG_2J0ROMS_3…
Rick, thanks. This morning I’m in a quandry. Triad has sent me an affidavit to fill out in order to split our interest [3 siblings]. However, the land description on it doesn’t exactly match what is on the Final Decree that gave our father the minerals in the first place. That is dated 1966 and I think if I can find the lease under which the RI was being paid at that time, I could clear this up. Do you know if/where I can find records that old?
Richard,
I think there are two in Garvin. 155 on the Gregory and 134 on the Williams. In Stephens there are 3 on the Casados and 1 on the Young
Pamela,
The description that Triad used may only be the property that they are concerned with. Also the final decree may include an incorrect description. I have pulled several in our chains of ownership that had incorrect description. In some cases more, some less than what the person actually owned.
The Garvin County Clerk’s office will have a copy of the lease. However, they are not obligated to search for it. Sometimes a clerk will take a look and give you the book and page number, You can then mail a check and request for a copy. As busy as the counties are I have visited lately, I doubt it though.
Even then the property description in the lease may not show what you are looking for. Most of the time the lease will reference the description in the original deed or patent from the state or tribe. The description on those “tracts” and the “tracts” used in the unitization order may be the same.
I have found these unitizations can be complicated to sort out and/or audit for correct numbers. (Compared to conventional well and spacing units)