Can anyone explain to me the difference between the proportionate vs. the NRI interest. I was recently given both figures on some interests that I have in Doddridge County. The NRI interest is smaller. Not sure which to expect on my new division order.
So NRI is Net Revenue Interest, and is usually a number that the producer is interested in because that’s the money that they get to keep. The proportionate interest is usually how many acres you have in a unit; say the unit is 100 acres and you have 1 acre, your proportionate share is 1/100, or 1% of the unit. You would be paid a royalty on that 1 acre. So if you negotiated for a 20% lease (very nice) you would get 20% of the money paid for the gas from one acre of the 100 acres, or 0.20% of the revenue from the unit. The company would get 80% of the money paid for the gas from one acre of the 100 acre, and that would be their NRI on that one acre. That wouldn’t be their NRI for the unit though, because other leases would have different royalties. Make sense?