This may be a stupid question but I was asked this question that I couldn't answer... When you own a NPRI that is 1/16th of 1/8th where does the 1/8th come from? Why is it not just 3/16th NPRI? When I go back to read the royalty deed it reads " I do hereby convey one/sixtenth of the standard 1/8th royalty of all..."
Kelly,
I'm guessing that the "standard 1/8th royalty" comes from the assignment of royalty from an old lease, an old state lease, or a federal else. In any case the royalty assigned pertained to a portion of an owned royalty on a lease that was expected to be held by production, or in the case of a federal lease, over the remainder of a 10 year term. If it turns out that the grantor had 1/16 of a yet undermined royalty, it may end up being higher percentage assigned.
As to the math, 1/16 of 1/8 is 0.78125% while 3/16 is 18.75% or 24 times higher than 1/16 of 1/8.
Hope that helps. I've never heard of "NPRI" . Is it net profits, net proceeds, non-producing?
Non-participating royalty interest. Interest or share in the production under a lease without having executive rights to grant. Generally perpetual in deed form, but can be for a certain term and revert back to the grantor.
Thank you Mr. Scott. I've dealt with the concept often in mineral estates but had not seen the initials in use before. Gary H
B Scott Manning, CPL said:
Non-participating royalty interest. Interest or share in the production under a lease without having executive rights to grant. Generally perpetual in deed form, but can be for a certain term and revert back to the grantor.