My grandparents may be getting robbed for their oil

#1

I knew my grandparents had some land that produces oil for years now. They transferred a chunk of it over to my mom and I was over there today I saw the paperwork. They only get 0.0002629% royalties… I’m not familiar with how it usually works but that doesnt seem right at all

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#2

As you admittedly are not familiar with oil and gas, before you start making accusations of robbery, you need to take the time to learn about this business. Join NARO (National Association of Royalty Owners), read informational postings on this website, do some research on how many NET acres your family owns and how many GROSS acres are in the unit for the well(s) and the oil and gas lease terms (particularly the royalty rate) which was signed by your grandparents. If you grandparents owned 2 net acres out of a 640 gross acre unit at 1/8 royalty, then the royalty decimal would be 2/640 X 1/8 = 0.0003906. Understand that the decimal is not a percentage - the percentage is 0.03906%. If they gave 1/2 of their minerals to your mother, then her royalty decimal would be 1/2 X 0.0003906 = 0.0001953. There are a lot of variables for you to learn about and you will find it very interesting.

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#3

Well that’s more reassuring then. Thank you. I plan to do a lot more research. I saw a few documents today for the first time, and my mom couldn’t explain what any of it meant, and my grandmother probably doesn’t understand it any better.

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#4

Start reading the documents. They can be confusing at first, but read them again and again and they will become more clear. Ask tons of questions on the forum. Join NARO, read the Mineral Help tab above. We all started at zero and it is do-able given some patience.

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#5

My daughter got her check yesterday for an oil and a gas well that produced $44,000.00 net income. for the month. Her check? It came to $4.15. It is hard to calculate sometimes, the next month the net was $18,660 and her check was $5.78. “Owning” an oil well don’t necessarily mean you are getting rich very fast.

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#6

That can be true. Back a few generations ago, when folks had 160 acres or so, the minerals were more consolidated. (However, oil prices and gas prices were very low!). As the generations move on and minerals are divided up into smaller and smaller parcels, the personal net acres can end up being rather small. We are just thankful to have what we do have and try to invest it well. We have to remember that the working interest owners take all the risk in drilling the wells. 100% of the drilling and completion costs is all on their tab. We get royalties fairly soon after the well starts producing. Their share of royalties goes back to them to pay off all those costs before they can invest in new wells. May take years for them to get their money back.

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#7

That was what I thought didn’t look right. I saw a check stub that showed 3 of her wells produced a combined $1.4 million in a month and the check my mom got was only $400. It didn’t seem right but I’m starting to learn that it might be common. I just know my grandma was the one who set everything up and she’s a sweet enough lady, she could’ve been taken advantage of and not known it

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#8

NARO has been a great source for me. I was thrust into managing my family’s properties about a year ago and knew absolutely nothing. Now I am negotiating leases confidently and I understand how to calculate the net mineral acres. It’s important to know what you own. Most heirs have an undivided interest, which is expressed as a fractional interest and when calculating the net mineral acres plus the gross acreage it is in decimals (also known as Division of Interest). It may seem small, but it can add up if the price of oil/gas is high

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