I recently agreed to lease some of my mineral rights to a landman company in Colorado. The net mineral acres being leased total 80 and the gross (surface) acres total 320 acres. I do NOT own any of the surface acreage, but the lease describes the property as consisting of 320 acres -- from the legal description -- and doesn't specify net or gross. I don't own 320 surface acres; I own 80 mineral acres.
Is this a mistake? If not, why is it stated this way? I am confused. Please help clarify if you know the answer. Thanks!
Brooksye:
If you own 80 net mineral acres, you should be paid a bonus/acre based on these 80 NMA. The total gross acres in the tract is 320 which consists of others who have NMA. When a permit to drill is issued, a spacing unit will be determined where in most cases it will either be 640 or 1280 acres. If your NMA is in the spacing unit, you will be paid a % royalty based on your lease agreement. In some cases, you will own a % of the NMA if others are a party to these minerals (undivided interests).
No that is not a mistake. You own 80 mineral acres under the 320 acres of surface. So on your lease you will see the gross acres and the legal description will be for that 320 acres. Of that 320 acres you own 80 mineral acres or 80 net. So imagine the 320 gross acres as a pie, you own a piece of the whole pie. What you own is all of the 320 gross acres but you own 25% of that 320 gross to give you 80 net.
I hope this helps.
What township and range are your minerals in?
Township 17 South, Range 48 West
Mineral Joe said:
What township and range are your minerals in?
This helps a lot. I appreciate your taking the time and effort to respond. Your pie analogy really enables me to visualize the concept.
Alexander Newell said:
No that is not a mistake. You own 80 mineral acres under the 320 acres of surface. So on your lease you will see the gross acres and the legal description will be for that 320 acres. Of that 320 acres you own 80 mineral acres or 80 net. So imagine the 320 gross acres as a pie, you own a piece of the whole pie. What you own is all of the 320 gross acres but you own 25% of that 320 gross to give you 80 net.
I hope this helps.
Now I understand it. As you can tell, I am a newbie to this realm and I just couldn't grasp the concept. Thank you so much for taking the time and trouble to spell it out for me. I really appreciate the details.
charles s mallory said:
Brooksye:
If you own 80 net mineral acres, you should be paid a bonus/acre based on these 80 NMA. The total gross acres in the tract is 320 which consists of others who have NMA. When a permit to drill is issued, a spacing unit will be determined where in most cases it will either be 640 or 1280 acres. If your NMA is in the spacing unit, you will be paid a % royalty based on your lease agreement. In some cases, you will own a % of the NMA if others are a party to these minerals (undivided interests).