A WI is the lessee under a lease. As a simple example, Lessee owns 100% of the leasehold and pays all of the related costs (drilling, operating, repairs, etc). If the royalty rate is 15%, then the mineral owner receives 15% of the revenues as royalty. So the WI / Lessee is paid 85% of the revenues which will hopefully cover the costs and the royalties. The 85% is called NRI (net revenue interest) in the lease which will read as 0.85. If the lease is 10 acres and it is part of a 100 acre unit, then WI share of costs and revenues will be reduced by 10/100 to 10% of costs (JIB charge) and 8.5% NRI of revenues, or 0.08500. Where an operators pays on the tract basis, then the NRI will be 0.85 as 85% of the 10 acres. BUT the total gross revenues will be adjusted downward by to the 10% share of unit acres. You come out the same, getting a higher percentage of lower allocated revenues. The JIB decimal will always exceed the real NRI, because the royalties are deducted from your WI. In your situation, there is the complication of high operating costs for the old unit, including well plugging and well reworking and well repairs, and falling volumes and oil prices. To get a better idea of how the economics works, you need to break the costs and revenues down to the individual wells - especially separating out the old unit from the new wells. It is possible that the unit costs exceed the unit revenues, as opposed to the new wells. Also, when you invest the $2,000 into a new well, the well may not payout for a year or more. Another question, how far in advance are the drilling costs being collected in relation to the time to drill and frac the new wells? Have all the wells been drilled and are producing? Or are some wells still waiting for fracs or shut-in until oil prices improve? You may want to separate the new wells onto separate spreadsheets to trace the drilling and production and revenues.
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