I recently became a new interest owner of an oil lease in Love County Oklahoma through inheritance.
The lease is operated by XTO and has produced over 300,000 barrels of oil from June of 2022 to December of 2023.
According to the oil lease, I am to receive 3/16 of the net proceeds and $1.00 per net mineral acre.
The lease is sitting on 1 acre of land.
XTO reached out to me to inform me they’d be sending me a check for only $122.00.
I feel as if the check should be more considering all the production from 2022 & this being the first time anyone in my family has received a check from XTO since the lease began producing.
I have a copy of the oil lease and the completion report from when the job began in 2022.
As I’m new to all of this any information is greatly appreciated!
Welcome to the forum.
Your royalties are based upon the following equation.
Net mineral acres/actual spacing acres x royalty x % of perforations in your section.
You are sharing the royalties with perhaps hundreds of other people depending upon the spacing. I think the $1.00/net mineral acre may be a shut in fee, so not relevant at this time. If you give the section, township and range, it will be easier to answer. Does the lease say one acre? If so, then that may be the gross acreage and you might have something less. Did you get a Division Order from XTO with the decimal on it? If the well is a horizontal well over two sections, then the 300,000 bbls does not all apply to your section. More information is needed before one can determine if the $122.00 is correct. If you just inherited, then maybe your ancestor received earlier payments. Contacting the operator is how you find out.
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The lease states the following:
Lot No.5, Block 98 and Lot No.6, Block 100, Townsite of Marietta, Oklahoma of Section 20, Township 7 South, Range 2 East containing 0.98141 acres
API # 085-227833-0-0000
Miller 1-28H20X17X8R
According to the completion report it is a horizontal hole.
As for ancestors receiving payment before me isn’t possible as the lease was in my my grandfather’s name and he passed in 2018, the well began producing in 2021.
I really appreciate all the information you’ve provided so far, Thank you!
That well is an extremely long well. Goes through three sections! So the % of perforations in section 20 are going to be much less than a well in one section. Case 201902617 Order 732402 gives the splits.
Section 20 has 46.3209%.
So now you have all of the pieces of the equation. 0.98141/640 x 0.1875 x .463209= your decimal amount. 0.0000133192992. So for every $1MM they make, you get 13.3192992 dollars minus taxes and any deductions allowed by the lease. Just as a guestimate, 300,000 blls at $65 = 19,500,000 x 0.0000133192992 equals about $260-$78 for fed taxes at 30% - $20 OK tax - $15 sev tax - any post production taxes gets pretty close to ~ 20= pretty close to your estimated $122.
