Revenue Clarification when drawing from multiple sections

General Mineral Rights Discussion
1

We own minerals in 19-13N-5W Canadian County. Well name “Karber 2-19-30” has a spacing definition of 65% section 19 and 35% section 30. The following is an excerpt from an email from the Operator explaining how the DI was calculated. However, it only addresses section 19. If 19 is proportionally discounted, shouldn’t we also get a proportional share of section 30?

Good morning, Joel

The Karber 2-19-30MH well is producing from section 19-13N-5W & 30-13N-5W, the allocation % from section 19-13N-5W is 68.52.

Our title shows that Milestone owned 26.06562 net acres, section 19-unit size is 640.55.

26.06562 / 640.55 X .1875 X .6852 = .005027407

Please let me know if you have any questions.

Thank you,

2

In OK, you will only get paid on the section in which you own mineral rights if each section was spaced at 640 before drilling. The equation is net mineral acres/actual spacing acres x royalty x percentage of perforations in your section. So your equation is correct for section 19.

If it was spaced at 1280 then you would get paid on both sections, but the equation would have the denominator change to 1280 (or the actual spacing which would be a bit higher than 1280 due to the sections being irregular on the west side of the township) and the last term would be 1.000 instead of the .6852 because 100% of the well is in the 1280. In the end, you get the same dollars in royalties.