I’m just wanting to know if you have undivided interest and have a lease. Along with the others that have the same undivided interest. There is four wells.
Does the operator take the same deduction’s for these four wells from everyone that’s leased with the interest amount?? So if there is 6 people that have the same undivided interest, is the same amount for taxes and all other deductions the same for these 6 separate people?
Also, Say the operator’s gross amount was $888,888 for oil, after taxes and the deductions after deductions they take from you. It comes down to you getting a check for $777. Would that feel reasonable?
Thanks for any information. I just want to understand things better.
The word “undivided” means that each person has a certain percentage of the entire acreage, not a specific geographic location within the acreage. In the old days, grandpa might have left his wife a “divided” interest which would be spelled out with geographic descriptors that gave her the specific 10 acres with the cabin and the garden plat and the minerals under it. Or depending upon the language of the granting document, grandpa might have given each of his four children and “undivided” 1/4th interest in his 160 acres of minerals. Each child would have a net of 40 acres, but not a specific 40 acres.
The deductions will depend upon what lease each of the children then signed. One child may have signed a no deductions lease and the others may have signed the draft lease from the agent that allowed deductions. Your royalties will depend upon your net acres, the spacing unit for the well, your royalty percentage and the taxes and deductions allowed. In ND, most leases allow for post production charges. For example, 10 net acres with 1280 spacing with a 1/8th lease will give a decimal of 10/1280 x .125=0.0009765625. For every $1,000,000 in gross sales, the starting amount owner royalty would be $976.56 before federal and state taxes and any deductions for post production charges. So deductions and taxes easily make that come out less and may or may not be reasonable. It is very hard to extract information out of ND operators to see what they are charging for post production charges such as marketing, transportation, de-watering, etc.