Hello: I have tried to check the claulations on statements and can’t seem to make tem come out as the ND oil companies’ results.
Without listing the dozens of columns in their spreadseets, it looks like the key columns for actually calculating owner net value boil down to ~
Owner % X Distribution % X Net Value = Owner Value (but its still 20% off - my calc is higher).
*which then is further reduced by owner taxes and deductions to get to = Owner Net Value (still ~ 20% off).
*A side question is what is “distribution %”? And, when did it come to fruition? Older family statements don’t have a column for it.
Thanks in advance for any thoughts on these question!
@Joysters5, usually Distribution% is the number used to actually compute the royalty distribution. From the payments I have seen, there is no need to multiply the Owner%
by the Distribution%, as the Distribution% is the number that is used. Typically they are
the same, but in some cases, with more complex leases, the Distribution% may differ
from the the Owner%. As an example, there might be a well that hits multiple formations
and there are different royalty rates depending on the depth or the particular formation.
The Owner% might show the basic surface ownership amount, but the distribution% would
take into account the different rates for different depths. Best source of information would
be the division order analyst for your operator.
The check should list both the royalty DOI and the distribution interest. This difference can occur when one non-operating working interest in the well takes its production in kind and sells on its own. Then the operator will no longer be selling 100% of the oil and gas. When this happens, the operator must adjust either the royalty rate (by the distribution decimal) or the gross sales and volumes to make sure that you as the royalty owner are kept whole. For easy example, suppose that your royalty DOI is 0.100. If the operator sells 100% of production for $1,000, then all the volumes and total sales are on the check detail and your royalty is 0.100 X $1,000 = $100. Now suppose that the other 50% non-op WI sells its half of the production. So the operator now sells 50% of production for $500. If the operator applied your royalty DOI to the $500, then you would only receive 0.100 X $500 = $50 and be underpaid. Most operators will adjust the reported sales back to 100%, to keep you whole and you will never know that the operator is not selling all the oil and gas. Other operators will instead adjust your decimal and call it a “distribution interest” and apply that to the $500 of actual sales. In that case, the distribution decimal will be 0.200 and you will be paid 0.200 X $500 = $100. This is an extreme example and most distribution decimals vary only slightly. It is important to understand this because when you compare the production volume, it will not match the production records.