If you know an individuals royalty interest in a tract of land as a decimal number was .0156250 (1/64) as specified in an estate inventory report and you also know that the associated oil/gas lease for this tract specified a 1/8 royalty what all information can be gleaned from this? Can I ascertain what the mineral interest (amount) was?
It is .125 acre in the entire tract. .125 x 1/8 (.125) = .0156250.
It is not as simple as this. First, you need to know how many gross acres are in the tract. Second, you need to know how the decimal was calculated. Is it only for the tract? Or is it the royalty decimal based the greater acreage in a well? Or is it possibly an NPRI in the tract? Suppose the tract contains 100 acres and you own 1/8 of the minerals at 1/8 royalty, and the well is limited to the 100 acres. Then you own 1/8 X 100 acres = 12.5 net mineral acres and your royalty decimal in the 100 acres is 12.5 nma / 100 acres X 1/8 royalty = decimal is 0.0156250. If the tract is 500 acres and you own 1/8, then you own 500 X 1/8 = 62.50 nma. Your royalty decimal in the larger tract is the same = 62.5 nma / 500 X 1/8 = 0.0156250. Now suppose you own 1/2 minerals in 100 acres = 50 nma. If the well was drilled on 400 acres and the Royalty Decimal is based on the 400 acres, then your well royalty DOI = 50 nma / 400 unit acres X 1/8 royalty = 0.01562500. There is a great difference in value based on the net mineral acres that you own.
1 Like
This topic was automatically closed after 90 days. New replies are no longer allowed.