My wife and I signed a 3 yr lease for 425.00 per acre with 1/5 royalty. The gross amount of acres is 375 in witch we own 10 net mineral acres. My question if they drill and hit gold I get 1/5 of the 10 mineral acres right? Also if they do hit oil what kind of return would I receive? I understand there is a lot of factors based on markets and how the well produces but can somebody give me a ballpark estimate as I have no clue what to expect 50.00 to 100.00 a month or 400.00-600.00 a month maybe more..I have no clue. The property is in Leon county if that helps.
It depends on where you are located in Texas…if it is in the eagleford shale and in the oil window, oil companies tend to pool together all the acreage into 640 acre units. If that is the case, your totally royalty interest in that well would be :
10/640 * 20% = .3125%
Its not uncommon for some of those wells to produce 70,000 barrels in the first year at a wellhead price of 75 dollars would give you early income of
.0031257000075 = 16400 dollars the first year
Wells however decline so the production of oil goes down every year
Is the 640 acre pool typical…would it be disclosed in the lease agreement? Our lease only talks about the 375 acres witch was solely owned by our family back in the late 30’s. Also I was giving different decimal interest for each of the 4 tracts of land .0215, .0153, .04, .04.
Given the above decimal interest of my royalties if I used the estimate formula you used some of those figures our through the roof! Am I correct?