My 90 year old mother has mineral rights in Blaine County, reported as in Section 4, Township 16N, Range 11W. Someone wants to buy the rights for $3450 per acre if leased on a 1/5th royalty.
What is meant by 1/5th royalty, please? How would that affect the price for the acre?
We're trying to find out how much acreage she inherited. We suspect it is not much. I see there is "action" in Township 15 of Blaine County. Would that indicate increased interest in Township 16?
Thank you for your answers.
1. The 1/5 royalty refers to how much of a share your mother, as the person who granted a lease, or inherited them from someone who granted a lease. So, if there were only one lease at a 1/5 royalty, and the well made $1000/mo., the mineral owner/lessor/your mother would get 1/5 x $1000 or $200.00. Now in Oklahoma, its never that simple. Because in all likelihood, your mother does not own all the minerals in her tract and her tract is part of a section, containing 640 acres. so, for arguments sake, lets say she owns 1/4 of the NW/4, which contains 160 acres, then her calculation would be 1/5 x 1/4 x 160/640 or .0125. So, for every $1000 of production, she would receive .0125 x $1000 or $12.50. Now, the revenue from the well should be larger than that.
2. Action is 15n could mean action in 16N is forthcoming. Depends on what kind of well, where in 15N the wells get drilled, price of oil, etc. May not be very soon, though.
Thank you for the explanations. Mom only received $4.56 in royalties for all of last year. We figured there really wasn't much property to worry about. Some one wants to pay $3450 per acre based on 1/5th royalty. We're no really that interested in keeping the mineral rights. Again, thank you.
tim dowd said:
1. The 1/5 royalty refers to how much of a share your mother, as the person who granted a lease, or inherited them from someone who granted a lease. So, if there were only one lease at a 1/5 royalty, and the well made $1000/mo., the mineral owner/lessor/your mother would get 1/5 x $1000 or $200.00. Now in Oklahoma, its never that simple. Because in all likelihood, your mother does not own all the minerals in her tract and her tract is part of a section, containing 640 acres. so, for arguments sake, lets say she owns 1/4 of the NW/4, which contains 160 acres, then her calculation would be 1/5 x 1/4 x 160/640 or .0125. So, for every $1000 of production, she would receive .0125 x $1000 or $12.50. Now, the revenue from the well should be larger than that.
2. Action is 15n could mean action in 16N is forthcoming. Depends on what kind of well, where in 15N the wells get drilled, price of oil, etc. May not be very soon, though.
Dear Mr. Gardner,
ALWAYS assume that the buyer had better information than you. Typically, they will feed on the bottom and see what happens.
Be careful,
Best wishes,
Buddy Cotten
If your certain they wanted to purchase then they are saying if you had a 1/5th royalty in her old lease that they'd pay you $3450 per acre, but I imagine she is leased at a 1/8th. You say she received a royalty of $4.56, What is her decimal interest off that revenue statement. The Jackson well produces very little gas and is 640 spaced.