I just got a lease offer for a property in Love County with terms I haven’t seen before. They are offering “a bonus consideration of $900 per net acre, reserving a 3/16 royalty, delivering an 81.25% NRI and a three year primary term.” What is this business about delivering a percentage of the net royalty interest? Am I correct that that’s just a sneaky way to give me only 15.2% not 18.75% royalty? Is this common? Sounds like I will need to negotiate that away.
No, they’re not trying to give you 81.25% of 18.75% (It took me a minute to figure out where you got the 15.2 number). They’re clarifying that after your royalty of 18.75%, they’re receiving the remaining 81.25% (18.75+81.25=100%).
Best of luck
Thanks! Very helpful.
The way you have phrased this it actually sounds like an “Oil & Gas Royalty Lease”, which is basically a scam that has been going around. It looks like a lease but you are actually conveying 13/16 of your royalty and retaining 3/16. Make sure you know what your document says and means before going forward.