Questions on Decimal Interest Definition and Calculation

Hi all,

I am very new to this - my family has mineral rights in a lease, but don't own any of the land, so how do we calculate our decimal interest and also is decimal interest the same as mineral interest?

What we have is 30 mineral acres out of 200 with a 25% royalty - I am confused in that I have tried to calculate this according to a formula I have found, but when I use 0 acres - it doesn't seem to work out right. Would I do it this way:

30/200 x 25% or would I do it 0/200 x 25%.

I will admit I am very deficient in doing calculations.

Thanks a whole bunch for your help.

Ms. McGuire:

This often confuses folks. You need to know a few facts.

1. what quantum [how much] of the minerals do you own in your tract. For your purposes let's assume it is 100% or all. It could be one-half, one-quarter or some other fraction of the whole 30 acres or, you could own say 100% under only a portion of the 30 acres, say 100% of 5 acres. Reads confusing but if you use a system it is really not.

2. How large is the unit in which the property is included. Said another way, what percentage of the unit that your propertyt is included in is your property. This can range from 100% [whee your property is not pooled with another] or a portion of the larger unit in which your property is pooled, say 200 acres].

3. You must know your royalty rate, for example 25% [there is also the necessity of knowing if your royalty is affected by what is called a Non Participating Royalty Interest, but that is for another day].

Armed with these facts:

Divide the number of mineral acres you have [30] by the number of acres in the unit [200] [should get an answer of 15% or .150000. Then multiply your royalty rate [25%] by your percentage of the pooled unit. [should get .0375000].

Thus, if your well produces 1,000 bbls of oil at current prices [$79.00/bbl] you should receive a check for $2,962.50 less deductions for severance taxes and expenses to clean up or transport the oil.

Hope this helps


Thanks! It did help! Much appreciated!