I recently inherited a small interest in some property in Beckham and Roger Mills Counties. My mom actually inherited the mineral interest back in the late 70’s. She signed a lease with no knowledge of what she was signing and has received only pennies since. I called the managing company a couple of years ago to ask them how they arrived at the numbers they were using to compute the royalty share and was told I needed to hire an attorney (which I did not do). There were two tracts on the lease and she was to receive a 3/16 share. It is obvious where some of the numbers in the formula come from but not so as to why they are computed as such. I was wondering if someone could help me to understand the formula. It is as follows: 3/128 x 3/16 x 78.95/637.60 = .00054415. My mother only had 1.85039 net acres. There were eight kids in her family. I don’t understand where the 3/128 comes from and I don’t understand why they are dividing the two tracts (78.95 & 637.60) into each other. Any help would be appreciated. I got these numbers from a Division Order that I ask them to send me.
Dear Mr. Sanderson,
Your mother had a 3/128 mineral interest in 78.95 acres. (1.85039 net acres)
The unit size was 637.60.
The royalty percentage was 3/16.
When you multiply, you can put the numbers in any order.
In their case they did it like this:
(Mineral Interest) x (Royalty Rate) x (Tract Size/Unit Size)=.00054415
Thank you Mr. Cotton for your reply. I still don’t understand how the 3/128 originated. Can you enlighten me on what constitutes the make up of that fraction. I understand the math of the equation. Thanks again
Dear Mr. Sanderson,
The fraction is your mother's mineral interest fraction in the whole of the 78.95 acres.
As to how that number was deraigned, full mineral title would need to be run on her interest. The operator did that process and had it reviewed by an oil and gas title attorney.
Thank you very much. Sorry, but looks like I mis-spelled your name. I appreciate your help. Have a nice day.