Newbie question -
If the landman's cover letter (for the lease) states they're offering a bonus of $X per net mineral acre, and I have a 'Y' net mineral acre interest in 'Z' acres of land, then is
the actual bonus amount = X * Y * Z dollars ?
X * Y
because it is the Y that determines your share. If you owned all of Z then Y = Z.
Kent,
The "gross acres" refers to the surface acres of the tract(s) legal description mentioned in the lease. The "net" refers to your "net acres" or "net mineral acres" (NMA) in the tract(s).
It is possible that you could have a different mineral interest percentage ownership in each tract. If so, then your NMA will be different for each tract even if each tract has the same amount of surface acres.
NMA is calculated per each tract: surface acres of the tract X your mineral interest in that tract = your NMA for that tract. You can then multiply the total of the NMA's by the amount the company is paying you per net acre to arrive at the amont they should be paying you.
Example for two tracts they want to lease:
If tract one has 640 surface acres and you have a 33.3333% mineral interest in it then 640 X .333333 = 213.33312 NMA
If tract two has 640 surface acres and you have a 5% mineral interest in it then 640 X .05 = 32 NMA
Then 213.33312 + 32 = 245.33312 NMA for the two tracts they want to lease.
If they are offering $300.00 per NMA then 245.33312 NMA X $300.00 = $73,599.94 which is what they would be paying you for the lease.
Thanks for the replies.
Wilson,
I understand your 1st 3 paragraphs, and your examples.
Using the numbers from your example (for "tract one"), and the variables from my question,
X = 300
Y = .333333
Z = 640
Follow-up : Is it a problem if the bonus amount, i.e., the $300 per NMA is stated only in the cover letter, and not in the lease document ?
They never state the Bonus Amount in a lease form. Don't want the other landowners or companies knowing what they're paying.
Gracias, amigo.
Charles Emery Tooke III said:
They never state the Bonus Amount in a lease form. Don't want the other landowners or companies knowing what they're paying.
They always state the bonus amount in a lease form. It is usually stated as $10.00 and other good and valuable consideration. They can also avoid stating any of the terms, including royalty, by filing a Memorandum of Oil & Gas Lease, instead of the lease itself.
In case someone still doesn't understand, if you own 1/4th of the minerals under 100 acres, and you are offered $300.00 per net mineral acre, the bonus payment will be $7,500.00.
Kent Conness said:
Gracias, amigo.
Charles Emery Tooke III said:They never state the Bonus Amount in a lease form. Don't want the other landowners or companies knowing what they're paying.