I know every case is different, just curious: can anyone tell me if your first payment would be a certain percentage?
I don’t exactly understand the question. You own a percentage and are paid your Royalty based on that percentage and your royalty rate. It would NOT be an exact figure, if that’s what you’re asking. There are many variables.
Just look at your lease. It will give you a percentage for royalties. As far as I know, with mine, they email me and then I can look at statement and see how much the $$ the check will be. I’m a newbie as well, so welcome!
If it is a paid up lease you could get an initial payout or percentage snd then a monthly royalty check going forward. Consult an oil and gas attorney to make sure the terms favor you.
In general, your royalty payments are based upon your net mineral acres as a percentage of the spacing unit, your lease royalty and in the case of horizontal wells, you may have a percentage of the perforations in your section. For example, in OK, the equation is net mineral acres/actual spacing acres x royalty x percentage of perforations in your section. 10 net mineral acres in a 640 acre spacing at 1/5th royalty and 50% perforations in a two section well would give a decimal of 10/640 x .20 x .50=0.0015625. Other states have similar equations.
The first check from a brand new well is the largest that you will receive because it has several months of high production rolled into it. The following checks will be monthly and much smaller. Be careful to not spend all the money-prepare for the first two years of taxes. The IRS is quite sure to take their percentage and so will the state. Every month’s check will be different. The volume of products will naturally decline as the pressure drops and the prices for oil, gas and plant products changes all the time.
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M Barnes,
M Barnes,
Thank you so much for being so helpful
To us who are new to all this!!
To us who are new to all this!!
Appreciate all your time and effort here.
Keep asking questions!