Hi all, I am at the point where I am going to start getting my royalty payments after twelve years leasing my mineral rights here in Pennsylvania.
There is a well-pad for gas about half a mile down the road from me. I was told, when I called the leasing company that two of the wells on that pad run underneath my property, but I will also be included in the third one. So far, I received two division orders, and expect to receive my third one tomorrow. My buddy, and neighbor who I helped negotiate his lease as well also received his division orders for these two wells. I’ll give some information.
My property is 69.5 acres or so. My buddy’s is about 13.9 acres. In our leaders they say the decimal interest is calculated with this formula.
Mineral Interest x Royalty Interest on your leas x # of acres owned by you that are contributed to unit / total # of acres contributed to unit = Division Order Decimal.
For well 1 my division interest is .00955293, my RI is .17 (17%), my Mineral Interest is 1 (100%). As far as I am aware the minimum well pool size in Pennsylvania is 640 acres. I use this to calculate that my “# of acres owned that are contributed to unit” to be about 35.96 Acres.
For well 2 my division interest is .01711355, my RI is .17 (17%) … I use this to calculate that my acreage contributed to it is 64.427 acres.
My buddy’s decimal interest for well 1 is .00007580 and he has the same RI. When I calculate the acres contributed for him it is 0.2853647058823529.
My buddy’s decimal interest for well 2 is .0060556. When I calculate the acres contributed for him it is 24.87 acres.
We are confused. How is his decimal interest predicting an acreage contributed more than his property size?
I am going to call the leasing company tomorrow, but I thought I’d ask here first. We expect to get Well 3’s division order tomorrow as we got well 1 Friday and Well 2 Saturday.
Thank you for all of the help!