Need help with owner Interest calculation on statement please

Hello All,

Could someone explain how a company derives the owner interest in an allocated well in Texas on a statement please?

What I have figured so far is correct. Unsure of the final calculation or what am I missing to find what I am looking for? I want to verify all is correct on new Division Orders. Using previous info below for example to understand calculations. Thanks for any help in this. mk

This is the figure I am trying to understand how they derived? Owner interest on statement is " 0.00068478 "

What I know: NRI in 114.00 acres @100% = 0.01005747 SW/4, 114 acres, Section # NRI in 114.00 acres @25% share = 0.01005747 X .25 = 0.00251437.

I believe that makes me have 2.293 NRA. ?

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You need to know the size of the spacing unit for the well to determine your correct share. If you post the actual well location, Iā€™m sure someone can help you with that.

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Steve thanks for that info. Here is the info and a PDF survey plat. API # 329-43136 LEO 8-5-A - Well # 4201H 08 - MIDLAND County Thanks MK

PR0004332562_0001.pdf (321.4 KB)

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Allocation wells are not based strictly on acreage as is done with a unit. Instead you look at the fraction of the number of feet of productive lateral within your tract vs the total productive lateral and then apply your fractional net mineral acres within your tract and your royalty decimal. The productive lateral is the number of feet from the first take-point to the last takepoint in the completed horizontal wellbore. From plat, it looks like distance from section line to last take point in Section 5 (114 acres) is 1786 feet. You need to calculate total productive wellbore or maybe find it on completion report filed with RRC.

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TD, Thank you for that information. Now I have a direction to look at. I think you have filled in the missing piece I have been looking for. Again many thanks, MK

So based on the plat provided. You would own in 1786 ft of lateral out of 7,681.96 total feet of lateral. Your allocation percentage is 0.2324927492462861 (dont need all the decimal places beyond 10 or so but just to be safe. Now take that times your NRI of 0.00251437 x 0.2324927492462861 = 0.00058457279. Need to make sure that I got all the NPZ in the plat. Might be why they are higher plus the 100ft from the top of the well and the start of the well.

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Actually just took out most of the NPZ from the length of lateral and its .0006720580218977. Close enough. Looks like your DO is correct.

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Thank you Tyler_M very much that is of great help.
One thing I do have a question about what does NPZ stand for and how to locate that figure please. :slight_smile: I am always learning here and the main one I have learned is there are no stupid questions here, as this group is the most informed and helpful I have ever been associated with. :slight_smile: Again many thanks for your help with this matter. MK

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NPZ is non-perf zone and generally appear on preliminary plats filed for a permit. These are due to the fact that the operator lacks required lease rights to connect two tracts and so cannot perforate the wellbore for within 330 feet of from the common lease lines. Usually this is worked out and the NPZ are removed. The plat you attached is the first plat filed to get the permit. If you look at permits on RRC site, you will see that the NPZ were removed on a later-filed plat. Regardless, you never use the permit plats to determine your royalty decimal for an allocation well. This is because the permit plat is a best-guess estimate of how the well will turn out. There may be a drilling problem and the well is cut short or there is a frac problem and the full lateral wellbore is not completed. You must use the as-drilled plat filed with the completion report to determine the producing lateral length and the number of feet in your tract. On RRC website, Completions, the plat filed by Parsley lists Total Productive Length (FTP to LTP) as 6,547 feet and your Leo 5 tract (114 acres) is 1,783 feet. As you can see, the Productive Length is significantly shorter, and your tract is slightly longer. Looks like difference is in drillsite tract Leo 8F. Fraction is 1783 / 6547 = 0.27233848 and then multiply allocation factor by your NRI - 0.27233848 X 0.00251437 = 0.00068476. When D.O. analyst calculates 100% of mineral owners and WI, there can be a small variance at 8th digit.

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TennisDaze, That is great information and I thank you for the detailed explanation. One more question TD. When you refer to the RRC site, exactly where are you going as I cannot find that info that you have referred to? Many thanks it is much appreciated. MK

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Texas RRC has a website. On main page scroll down to Queries - Online Research. This opens list of permits, completion, production data, wellbore, etc. Spend time exploring the wealth of information. Go back or start over when necessary as you learn this site. GIS map viewer will let you explore the county and see nearby wells. https://www.rrc.state.tx.us/.

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TennisDaze, Thank you so much again. :slight_smile: MK

I would just like to know how you get things posted here? I have two pending posts looking for a mineral broker, and this site does not post them.

They do not allow people to solicit on this site and the moderators probably do not want to post that information on the site. (I think its somewhere in the terms of use or something.) Why do you need a broker?