Confused about NPRIs

Ownership and Title
1

Hello. I am currently receiving royalties for oil wells on 50 acres of a section in Texas. The lease was burdened with an NPRI, so in actuality I receive royalties for 1/2, (25 acres). I just got an offer to buy my mineral rights, (“50 net mineral acres…based on public data”). So I’m wondering…

  1. Is the royalty company unaware of the NPRI and incorrect to pay me for 50 acres?.
  2. If I sold, what would happen to the NPRI?.
  3. Would the people currently receiving the NPRI stop getting royalties?
2

@dogslobber, it is probably not possible to answer your specific case without seeing the specific documents involved and knowing the conditions that the NPRI was subject to. I’ll try to answer what might typically happen, but the actual details are really important.

  1. Most likely the buyer isn’t aware of the NPRI unless they have done pretty detailed research. You likely still do have 50 mineral acres under your executive rights, but only 25 mineral acres of royalty rights.
  2. The NPRI probably doesn’t go away if you sell all or a portion of your mineral rights. The type of deed and the wording of the deed may determine which party is still burdened with the NPRI or if it is a shared burden.
  3. If all goes as it should, the NPRI owner would probably still get paid and not even know that you sold all or part of your mineral rights.

It can be confusing, so it is probably best to not just rely on the buyer’s draft deed and the buyer’s attorney to make sure things go as you intend.

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3

Just thinking out loud here. I would think an NPRI is similar to an ORRI in the way that you still have 50 acres accounted for except, you own 50% of the royalty or what ever % of the 50 acres Therefore, you should be able to sell your NPRI to whomever with no consequence in regards to the royalty of the other % owner. The only the only thing that would change that would be if in the description of the NPRI it spells out specifics of X% of the 50 total that you may sell? I hope that makes some sense? I may be way off base, but that is how the ORRI’s that I have work in Texas. MK

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4

More likely than not you own 100% of 50 gross acres leased at 25% ie 50 net mineral acres * .25/.125 = 100 net royalty acres burdened by a 1/2 NPRI or 50 net royalty acres. In this case, 50 NMA/NRA it’s all the same; sounds like they are aware of the NPRI which would not go away.

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5

Thanks for the reply. There seems to be a consensus that the NPRI goes with any sale, and the people currently getting royalties will continue to receive them. Makes sense. I don’t intend on selling, but that offer was very good and seemed to reflect all 50 acres. Doesn’t make sense, though, for a buyer to pay for 50 mineral, (royalty), acres but get only 25.

6

Thank you all for the input. I’m a little less confused than I was.

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Usually mineral and royalty buyers offer per net royalty acre; however, they like to word offers on net mineral acre because it allows them to increase the price per acre for any royalty greater than 12.5%…be careful with this. If there was no NPRI, they would be getting 100 NRA at 25% royalty. If the royalty was 12.5% and not 25% with a 1/2 NPRI, then they would be getting 25 NRA. The 50 NMA is constant; obviously, their $/NMA would have to be halved in the second instance.

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