We have received a division order on a project where we have a non-participating royalty interest. (We haven’t signed, or seen the leases). The NPRI is based on a percentage of the production reserved for royalties. I’m being told that it is 1/8th of production, exactly as it was in the 50’s when the royalty deed was executed. What document does the producer usually generate to confirm what the current percentage of production for royalties is on a project?
It depends on the wording of the original deed which granted or reserved the NPRI. Some have a fixed rate (such as 1/16 royalty) and some are based on a percentage of the lease royalty rate (such as 1/8 of the lease royalty). And how the deed is interpreted will be affected by state law where the minerals are located.
Thank you TennisDaze, The NPRI deed is in Texas. The original NPRI was from Dora Roberts in 1935. The verbiage is: “convey unto MC Lindsey 1/4 of 1/8 of all the oil, gas, and other minerals produced from the following described land…”
I appreciate you sending me to the “original” deeded interest. Successive deeds were on standard NPRI forms that included the “minimum percentage of production” clause. But based on the “original” creation of the NPRI, this deed will always carry the 1/8th of production in the decimal calculation.
Out of curiosity, is there a standard summary statement generated by an operator for an oil development’s cumulative percentage of production paid to royalties?
Thank you again.
There have been a number of recent cases on interpretation of the conveyance, which depends on all the language in the entire deed, not just a phrase. Consider having the deed reviewed by an oil and gas title attorney.