My Grandfather passed down some mineral rights that he bought in the nineteen fifties. Recently some of the wells started producing. I have had a very hard time trying to calculate our percentage of royalties owed. If a well produces 60,000 gallons of oil a month, or 720,000 gallons per year, next do you calculate 720,000 gallons X 3.75% (roylaty rate) = $27,000 Is that my cut or do you have to factor in the price per gallon?
You should look at your division order or a proceeds statement which should give you your percentage interest. Also, oil is priced by the barrel which is equivalent to 42 gallons/barrel. So 60000/42 equals 1428,571 barrels per month. If your percentage is actually 0.0375 then your interest will be 1428.571 x 0.0375 equals 53.571 barrels at approximately $40 / barrel should be $2142.85 for that month before taxes and costs.