Mineral Interest Calculation


#1

I am trying to figure out some mineral interest. This is an example of what I am trying to calculate:

Rose has 55% of 1/2 of undivided 153.15 acre interest in 633.15 - .00727547
June has 45% of 1/2 of undivided 153.15 acre interest in 633.15 - .00595266
John has 1/8 of 3/4 of 1/2 of undivided 153.15 acre interest in 633.15 - .00141730

I am trying to calculate the mineral interest to come up to what is on the right side. But, I am not
coming up with that number. Can you help?


#2

Are you trying to calculate a DOI in a unit or Net Mineral Acres in a tract? What does the decimal represent?


#3

The decimal represents the mineral interest in that lease. The title opinion is calling it a royalty but it is really a mineral interest. For example I figured this one out:
John has 1/2 of undivided 80 acre interest in 633.15 acres at 25% royalty in Lease 1 - .001579405
Jay has 1/2 of undivided 80 acres interest in 633.15 acres at 25% royalty in Lease 1 - .001579405

80 / 633.15 x 25% = .031588091 / 2 = .001579405 which each of them have


#4

You are mixing up concepts here. A mineral interest means that you own a fractional interest in the minerals in a tract. If John owns 1/2 minerals in 80 acres, then he own 40 NMA (net mineral acres). He has leased his minerals at a specified royalty rate. Once you look at the royalty rate in the lease (here 25%) and the acreage in the unit (here 633.15 acres), then you are talking about the royalty interest decimal, DOI (division of interest), which will be used to calculate your share of the production and revenues from the well and unit. Calculation of the DOI depends on the number of acres in the unit. If the well was drilled only on the 80 acres, then John’s royalty DOI would be 1/2 X 80 X 0.25 = 0.10000.


#5

Why is the .01579405 shown for each owner? That number is confusing me.


#6

John and Jay each own 1/2 of the 80 acres. So each owns 40 NMA. If each has a least with 25% royalty, then the DOI for each of them is identical. It is 1/2 fractional ownership X 80 tract acres / 633.15 unit acres X 0.25 royalty = 0.01579405. This is the royalty decimal which will be on the division order for the unit and will be on the check stubs. On the check, if the Gross Sales = $1,000, then the owner’s gross revenue will be $1,000 X 0.01579405 = $15.79. There will also be a reduction for severance taxes which will be calculated in the same manner. If the gross severance tax = $100, then the owner’s share = $100 X 0.01579405 = $1.58. John and Jay should each receive a division order from the operator which set out his personal DOI. It will not explain how they arrived at that figure, only give you the net number.


#7

Ok, great. That makes sense and I got that number too. How about if it is a percentage of 1/2? For example

55% of 1/2 of undivided 153.15 acres int. in 633.15 at 12.5% royalty, less 55% of the NPRI

and then I have others similar to this example:

12.5% of 13.34 acres of undivided 40 acre interest in 633.15 acres, plus 9.091% of 23,932/50,000ths of undivided 40 acre interest in 633.15 acres all at 12.5% royalty

I have about 25 of these to figure out and I just need to get a good idea on how they are calculated. I greatly appreciate your help.

Thanks.